Question

LiveLife Company had a credit balance of $10,000 in accounts payable at the beginning of the period, and a credit balance of $6,000 at the end of the period. Based on this information, the adjustment to net income for the period will be reported as:

Answer 1

A decrease of $4,000 which will be deducted from net income.

Step-by-step explanation:

Since the beginning credit balance of $10,000 in accounts payable is grater than the ending balance of $6,000 in accounts payable, it implies a decrease of $4,000 (i.e. $10,000 - $6,000 = $4,000).

This difference which is a decrease of $4,000 in account payable will be deducted from the net income.

Therefore, Based on this information, the adjustment to net income for the period will be reported as a decrease of $4,000 which will be deducted from net income.