Lincoln Company engaged in this transaction: Accrued employee wages earned but not yet paid at year-end.
Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Question

Quizplus · Accepted Answer

Accruing employee wages that have been earned but not yet paid does not represent a cash flow because no cash has actually been exchanged. This transaction is an adjustment to expenses on the income statement and liabilities on the balance sheet, but it does not affect the cash balance until the wages are paid.

Lincoln Company Engaged in This Transaction: Accrued Employee Wages Earned