Multiple Choice
When viewing a transaction list in accounting software, if item 1 is highlighted with a green box, what does this most likely indicate?
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2. Transaction Analysis
Journal Entries: Debits and Credits
Multiple Choice
Which of the following transactions does NOT affect cash during a period?
A
Paying salaries to employees
B
Purchasing inventory with cash
C
Recording depreciation expense
D
Receiving payment from a customer
Verified step by step guidance1
Step 1: Understand the nature of cash transactions. Cash transactions involve the inflow or outflow of cash during a specific period. Examples include paying salaries, purchasing inventory with cash, or receiving payments from customers.
Step 2: Analyze each transaction provided in the problem. Paying salaries to employees involves cash outflow, purchasing inventory with cash involves cash outflow, and receiving payment from a customer involves cash inflow.
Step 3: Consider the concept of depreciation expense. Depreciation is a non-cash expense that represents the allocation of the cost of a tangible asset over its useful life. It does not involve any cash movement during the period.
Step 4: Compare depreciation expense with the other transactions. Unlike paying salaries, purchasing inventory, or receiving customer payments, recording depreciation expense does not affect cash because it is purely an accounting entry.
Step 5: Conclude that the transaction 'Recording depreciation expense' does NOT affect cash during the period, as it is a non-cash accounting adjustment.
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