Question

True of Fall

1. If a company’s prepaid expense balance increases during the period, it should deduct the amount of the increase from its net income in the Operating Activities section of its Statement of Cash Flows.

2. A stock split would have no effect on total assets presented on a company’s balance sheet.

3. Assume that in a given year, a company must make an accrual for future expected warranty expenses. This situation will create a temporary income tax difference for the company that causes its income taxes expense to be greater than its income taxes payable.

 



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