Question

A company paid $900 to workers during May. Of this amount, $600 was for work performed in April, while the other $300 was for work performed during May. What would the impact of this transaction be during May on (1) the balance of cash, (2) cash-basis net income, and (3) accrual-basis net income?

Answer 1

a) The balance of cash is decrease by $900 as all amount paid to the worker

b) Cash basis net income decrease by $900

c) Accrual basis net income decrease by $300

Step-by-step explanation:

Given data:

Total amount paid to worker $900

Total amount paid to worker in month of APRIL =$600

Total amount paid to worker in month of may is $300

from above data we can calculated following

a) The balance of cash is decrease by $900 as all amount paid to the worker

b) Cash basis net income = Net income decrease by $900

c) Accrual basis net income = Net income decrease by $300