Accounting:Hiring Employees

How would hiring two new employees show up on your company's accounting documents?

Question options:

  • As a decrease in operating revenue on the income statement, and as a decrease in cash from operations (cash flow statement)
  • As an increase in operating expenses on the income statement
  • As an increase in operating expenses on the income statement, and as an increase in cash from operations (cash flow statement)
  • As an increase in cash from operations (cash flow statement)
  • Decrease in cash from operations (cash flow statement)
  • As an increase in operating expenses on the income statement, and a decrease in cash from operations (cash flow statement)
  • As a decrease in operating revenue on the income statement

Solution:
Additional employees will increase the operating expenses of the business. Increased operating expenses will decrease net income. On the Cash Flow Statement, cash in Operations will be decreased.

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