A Printing Company Prints a Brochure for a Client,and Then

question 48

Multiple Choice

A printing company prints a brochure for a client,and then bills them for this service.At the time the printing company's financial disclosure statements are prepared,the client has not yet paid the bill for this service.How will this transaction be recorded?

• A)The sale will be added to Net Income on the income statement and retained in Net Income on the statement of cash flows.
• B)The sale will be added to Net Income on the income statement but deducted from Net Income on the statement of cash flows.
• C)The sale will not be added to Net Income on the income statement but added to Net Income on the statement of cash flows.
• D)The sale will neither be added to Net Income on the income statement nor used to adjust Net Income on the statement of cash flows.
• E)The sale will be deducted from Net Income on the income statement but added to Net Income on the statement of cash flows.

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Definitions:

Labor Hours

Labor hours refer to the total number of working hours spent by employees performing specific tasks or duties.

Space Occupied

The amount of physical area taken up by a business, product, or equipment in a facility.

Direct Method

A way to prepare a cash flow statement where actual cash flows from operating activities are listed directly.

Custodial Services

Services related to the cleaning and maintenance of buildings and facilities.