Which of the Following Would Cause a Decrease in Cash

question 106

Multiple Choice

Which of the following would cause a decrease in cash?

• A)Lengthening the time it takes to collect receivables from 15 to 30 days
• B)Selling fixed assets for more than book value
• C)An increase in accrued salaries expense
• D)Paying suppliers in 60 days versus 45 days

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Definitions:

Cash Basis

The cash basis is an accounting method where revenues and expenses are recognized only when cash is received or paid, as opposed to when they are incurred.

Adjusting Entries

Journal entries made in accounting records at the end of an accounting period to update the balances of certain accounts.

Financial Statements

Formal records of the financial activities and position of a business, including the balance sheet, income statement, and cash flow statement.

Accounting System

A structured process of collecting, recording, summarizing, and reporting financial transactions of a business or individual.