A company purchased $400 of office supplies on account during May. All the supplies were used in May, and the account was paid during June

A company purchased $400 of office supplies on account during May. All the supplies were used in May, and the account was paid during June. What would the impact of these transactions be during May on (1) the balance of cash, (2) cash-basis net income, and (3) accrual-basis net income?

A) (1) No effect, (2) No effect, (3) Decrease.

B) (1) Decrease, (2) Decrease, (3) No effect.

C) (1) Decrease, (2) Decrease, (3) Decrease.

D) (1) Decrease, (2) No effect, (3) No effect.

Ch3 answer: A

A company provided $1,500 of services to customers during the month of May. The customers paid in June. What would the impact of these transactions be during May on (1) the balance of cash, (2) cash-basis net income, and (3) accrual basis net income?

A) (1) No effect, (2) No effect, (3) Increase.

B) (1) No effect, (2) No effect, (3) No effect.

C) (1) Increase, (2) Increase, (3) Increase.

D) (1) Increase, (2) Increase, (3) No effect.

Ch3 answer: A