Question

What is the change in the Balance Sheet as a result of a $5,000 invoice of concrete charged to job cost code 315.01.02620M?

a. Decrease in accounts payable for trade for $5,000 and an increase in notes payable for the same value
b. Increase in accounts payable for trade for $5,000 and a decrease in accounts receivable for trade for the same value
c. Increase in accounts payable for trade for $5.000 and a decrease
current period net income for the same value

Answer 1

A $5,000 invoice for concrete will increase accounts payable by $5,000 on the Balance Sheet, indicating a higher liability with no immediate impact on net income.

Step-by-step explanation:

The change in the Balance Sheet as a result of a $5,000 invoice of concrete charged to job cost code 315.01.02620M would be an increase in accounts payable for trade by $5,000. This action represents the company's increased liability because it now owes money for the concrete purchased on credit. There would not be an immediate impact on notes payable or accounts receivable for trade, nor would there be a direct change to the current period net income as a result of this transaction. The expense related to this purchase will affect net income when the expense is recognized, typically when the concrete is used. As such, the correct answer is an increase in accounts payable for trade by $5,000 without any corresponding decrease in another account at the time of the invoice.