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Ashish Bajaj

· started a discussion

· 1 Months ago

question explain (Question: 187217.0 )

plz explain the sense of question

Question:
If the following are balance sheet changes: 
Options:
A) Rs. 7,000 decrease in cash
B) Rs. 5,005 decrease in accounts receivable.
C) Rs. 10,001 increase in accounts payable.
D) Rs. 12,012 decrease in notes payable.
E)

None of these

Solution:

Ans (d)

Knowledge Expert

· commented

· 1 Months ago

For example, the accounts receivable asset is increased (debited) when sales are made on credit. The inventory asset account is decreased (credited) when recording cost of goods sold expense. The accounts payable account is increased (credited) when recording expenses that haven’t been paid.

The rules for cash flow adjustments to net income are:

An asset increase during the period decreases cash flow from profit

A liability decrease during the period decreases cash flow from profit

An asset decrease during the period increases cash flow from profit

A liability increase during the period increases cash flow from profit
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