Under accrual basis accounting,the recognition of salaries earned and the immediate payment of salaries to employees would
A)increase assets.
B)increase owners' equity.
C)increase net income.
D)decrease net income.
E)increase revenue.

Question

Quizplus · Accepted Answer

Under accrual basis accounting, salaries earned are recognized when they are incurred, regardless of when they are paid. When salaries are immediately paid, there is no change in the amount of salaries earned, resulting in no change in net income. However, immediate payment would decrease the cash balance, which is an asset, and therefore, the correct answer is D.

Under Accrual Basis Accounting,the Recognition of Salaries Earned and the Immediate