Say, the company incurs an Expense of $5,000 by purchasing a new computer in December. The company receives the new computer in December. If the computer seller allows 60 days to pay, then no Cash has left the buyers bank account in December. The buyer books this $5,000 as an Expense on the Income Statement in December. This Expense lowers the buyer's Net Profit in December, although no Cash is paid out in December. Accounts Payable increases by $5,000 on the buyers Balance Sheet in December.

Net Profit is "accounting profit" because the $5,000 is booked as Expense at the time of purchase in December, according to accounting rules.

Group of answer choices

The effect is that the buyer's Cash Flow is higher than Net Profit in December

The effect is that the buyer's Cash Flow is lower than Net Profit in December

The effect is that the buyer's Cash Flow is identical to Net Profit in December