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Crabbe Company reported $80,000 of selling and administrative expenses on its income statement for the past year.

Crabbe Company reported $80,000 of selling and administrative expenses on its income statement for the past year. The company had depreciation expense and an increase in prepaid expenses associated with the selling and administrative expenses for the year. Assuming use of the direct method, how would these items be handled in converting the accrual based selling and administrative expenses to the cash basis?

Depreciation Increase in
Prepaid Expenses



Deducted From Added To



Deducted From Deducted From



Added To Added To



Added To Deducted From


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Accounting-8215038.doc

Crabbe Company reported $80,000 of selling and administrative expenses on its income statement for
the past year. The company had depreciation expense and an increase in prepaid expenses...

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