Ames Corporation recognized accrued compensation cost. Use the following model t
ID: 2501607 • Letter: A
Question
Ames Corporation recognized accrued compensation cost. Use the following model to show how this event would affect the company’s financial statements under the following two assumptions: (1) the compensation is for office personnel and (2) the compensation is for production workers. Use pluses or minuses to show the effect on each element. If an element is not affected, indicate so by selecting the letters NA under the appropriate heading.
Ames Corporation recognized accrued compensation cost. Use the following model to show how this event would affect the company’s financial statements under the following two assumptions: (1) the compensation is for office personnel and (2) the compensation is for production workers. Use pluses or minuses to show the effect on each element. If an element is not affected, indicate so by selecting the letters NA under the appropriate heading.
Explanation / Answer
Assets
=
Liabilities
+
Equity
Revenue
-
Expense
=
Net income
Statement of cash flow
1
NA
+
-
NA
+
-
NA
2
+
+
NA
NA
NA
NA
NA
Assets
=
Liabilities
+
Equity
Revenue
-
Expense
=
Net income
Statement of cash flow
1
NA
+
-
NA
+
-
NA
2
+
+
NA
NA
NA
NA
NA
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