Which of the following transactions and events results in an increase in liabilities and a decrease in net income?

  1. The accrual of wages expense at year-end.
  2. Collecting cash from a customer for services to be provided in the future.
  3. The accrual of revenue earned at year-end.
  4. Adjustment of the unearned revenue accounts for revenue earned during the period.

Answer a. The accrual of wages expense at year-end

Explanation: The accrual of wages expenses at the year-end increases the liabilities and decreases the net income as the organisation must pay wages to its employees.

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