Which of describes the adjustment to reconcile net income

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Problem 1: A company's salary expense is $100, but it pays only $75 in cash as salaries. Assume that the company does not prepay salaries. The company prepares its operating cash flow section in the indirect format. Which one of the following best describes the adjustment to reconcile net income to the operating cash flows?

a. $25 to be added due to an increase in salary payable of $25.

b. $25 to be subtracted due to a decrease in salary payable of $25.

c. $100 to be added because a salary expense of $100 does not necessarily imply a cash payment of $100.

d. $75 to be subtracted because $75 in salaries paid does not imply a salary expense of $75.

e. None of the above.

Reference no: EM132965244

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