Question

3. for a calendar-year company, which of the following would cause accrual basis income to be more than cash basis income? a. accounts receivable balance decreased during the year b. accrued interest payable increased during the year cc prepaid rent balance decreased during the year d. salaries payable balance increased during the year e unearned rent balance decreased during the year

Answer 1

The answer is d. salaries payable balance increased during the year. Therefore, the correct option is D

Step-by-step explanation:

The correct answer is d. salaries payable balance increased during the year. In accrual basis accounting, income is recognized when it is earned, regardless of when the cash is received or paid.

When the salaries payable balance increases, it means that the company has incurred expenses for the salaries but has not yet paid the cash.

This increases the accrual basis income as it recognizes the expense, while cash basis income would not be affected until the actual payment is made.