Assume that a company recorded the following journal entry:Salaries Expense2,500?Cash?2,500Indicate whether each of the following statements is true or false with regards to the impact of this journal entry.________ a) Cash decreases________ b) Total assets decrease________ c) Liabilities decrease________ d) Cash flows from operating activities increase________ e) Net income decreases
What will be an ideal response?
a) T b) T c) F d) F e) T
a) This is true. A credit to cash decreases that asset account.
b) This is true. A credit to cash decreases total assets.
c) This is false. There are no liabilities in this transaction.
d) This is false. Cash decreases, so it would be reported as a cash outflow, not inflow.
e) This is true. Salaries expense increases, which would cause net income to decrease.
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