Explains the possible effects of action on the balance sheet

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Problem 1: At the end of Quarter 1, a company announces that its cash flows would improve in Quarter 2. To give an appearance of improved cash flows in Quarter 2, the company shifts paying cash to its suppliers from Quarter 2 to Quarter 1 by accelerating payments to its suppliers in Quarter 1. It also shifts receiving cash from its customers from Quarter 1 to Quarter 2 by delaying receipts from customers in Quarter 1. Pick one of the choices below that describes the possible effects of this action on the balance sheet at the end of Quarter 1. The company only manipulates cash flows; it does not manipulate reported income.

a. Increase non-cash assets or increase non-debt liabilities
b. Increase non-cash assets or decrease non-debt liabilities
c. Decrease non-cash assets or increase non-debt liabilities
d. Decrease non-cash assets or decrease non-debt liabilities

Reference no: EM132976753

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