Which of the Following Correctly Describes the Effects of Accruing

question 105

Multiple Choice

Which of the following correctly describes the effects of accruing income tax expense at year-end?

• A)A cash payment is made to pay the taxes due.
• B)Liabilities are not affected.
• C)Retained earnings decreases.
• D)Net income increases.

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Definitions:

Accounts Payable

Liabilities owed by a business to creditors for goods and services purchased on credit.

Work in Process

Inventory that includes the cost of raw materials, labor, and manufacturing overhead for products that are in various stages of production but not yet complete.

Finished Goods

Finished goods that are prepared and available to be bought by customers.

Work in Process Inventory

Inventory that is in the process of being manufactured but is not yet complete.