Question

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

a. an increase in equipment costs for $5,000 and a decrease in profit for the same value
b. an increase in the subcontractors costs for $5,000 and a decrease in profit for the same value
c. Increase in accounts payable for trade for $5,000 and a decrease in current period net income for the same value
d. Increase in the materials cost for $5,000 and a decrease in profits for the same value

Answer 1

The $5,000 invoice for concrete leads to an increase in materials cost and a decrease in profits on the Income Statement, as well as an increase in accounts payable.

Step-by-step explanation:

The change in the Income Statement as a result of a $5,000 invoice for concrete charged to job cost code 315.01.02620M would be an increase in the materials cost for $5,000, since concrete is a material used in construction, and a decrease in profits for the same value, assuming that there are no other changes to revenues or expenses that would offset this cost. When costs for materials increase, it typically reduces the net income for the period because it's an additional expense that the company has to bear. However, this change also causes an increase in accounts payable for trade, since the invoice implies that the company now owes money to its supplier, which is a liability that will be paid off in the future.