Question

As an adjustment to operating expenses per the income statement, an increase in accrued liabilities would be added to operating expenses to determine cash payments for operating expenses.

Answer 1

Answer:

This is a true or false type of question as shown in the attached document.

The correct answer is false

Explanation:

The question was whether the statement on the treatment of increase in accrued liabilities as highlighted in the question is true or false.

In determining the cash payments for operating expenses , increase in accrued liabilities is deducted not added to operating expenses.

This is a case of single entry accounting system where the business does not operate based on the principle of double entry,instead transactions are recorded one-sided.

The justification is that the increase in accrued liabilities is a portion of the current period expenses not yet paid for,as a result,it would be necessary to deduct it from total expenses in order to ascertain the  remaining portion of the expenses already settled with cash.

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