Wyatt Company Paid $57,000 in January, Year 2 for Salaries

Essay

Wyatt Company paid $57,000 in January, Year 2 for salaries that had been earned by employees in December, Year 1. Indicate whether each of the following statements about financial statement effects of the January, Year 2 event is true or false.a)The income statement for Year 2 is not affected because the salaries expense had been recognized at the end of December, Year 1.b)Cash flows from operating activities decreased on the Year 2 statement of cash flows.c)Payment of the salaries in Year 2 increased a liability.d)The Year 2 statement of changes in stockholders' equity would not be affected because the salaries expense had been recognized at the end of December, Year 1.e)Both assets and stockholders' equity decreased in Year 2 as a result of this transaction.