On December $31,$ year $1,$ Elliott Company owed $$4,500$ in salaries to employees who had

worked during December but would be paid in January. If the year$-$end adjustment is properly

recorded on December $31,$ year $1,$ what will be the effect of this accrual on the following

items for Elliott?

Net Income

A$.$ Increase

B$.$ Decrease

C$.$ Increase

D$.$ Decrease

Option B

Option D

Option C

Option A

Retained Earnings

No Affect

Decrease

Increase

No Affect