Answer:
B. Escalator Clause
Explanation:
An escalation clause is a clause in a lease or contract that guarantees a change in the agreement price once a particular factor beyond control of either party affecting the value has been determined. An important example of this is a contract that adjusts for inflation.
Accounts such as Wages and Salaries Expense, Wages Expense, and Salaries Expense are used to record the gross wages and salaries earned by employees during the accounting period. Gross wages and salaries means the amount before payroll taxes and other with holdings.
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Answer:
Grouper Inc. is involved in a lawsuit at December 31, 2020
It is given that Grouper will be liable for $863,600 as a result of this suit. Therefore, the journal entry for this situation is as follows;
On December 31, 2020
Lawsuit loss A/c Dr. $863,600
To Lawsuit liability $863,600
(To record the lawsuit loss of the Grouper Inc.)
Answer:
Cash Flow from Operating Activities
Net Income $24,000
Adjustments for Non-Cash items :
Depreciation expense $12,000
Adjustments for Changes in Working Capital :
Increase in Accounts receivable ($10,000)
Decrease in Inventory $16,000
Increase in Salaries payable $1,000
Net Cash from Operating Activities $43,000
Explanation:
The Indirect method reconciles the Operating Profit to Operating Cash Flow by adjusting the Operating Cash flow with the following items :
- Non-cash items previously deducted or added to Operating Profit.
- Changes in Working Capital.
