A $12,000 increase in prepaid expenses combined with an $8,000 increase in accrued expenses payable will cause the cash payments for operating expenses to
A) increase by $12,000.
B) increase by $4,000.
C) increase by $8,000.
D) increase by $20,000.

Question

Quizplus · Accepted Answer

The cash payments for operating expenses increase by $4,000 because the $12,000 increase in prepaid expenses is a non-cash transaction that affects future periods, while the $8,000 increase in accrued expenses payable represents additional expenses paid in cash, leading to a net increase of $4,000 in cash payments.

A $12,000 Increase in Prepaid Expenses Combined with an $8,000