would result in a decrease in net income under the cash basis, but it would not result in a decrease in net income under the accrual basis.
A) The purchase of inventory on account
B) The recognition of depreciation expense
C) The payment of two months of rent in advance
D) The expiration of prepaid rent

Question

Quizplus · Accepted Answer

Under the cash basis, paying rent in advance decreases cash and thus net income. Under the accrual basis, it is recorded as a prepaid expense and does not affect net income until the rent is used.

Would Result in a Decrease in Net Income Under the Cash