1) Describe the difference between accrual and cashbasis accounting.2) What is the adjusting process? What accountsnormally require adjustment?3) What is depreciation? What is depreciationexpense?4) Discuss another topic from Chapter 3.

Answered: 1) Describe the difference between…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1) Describe the difference between accrual and cash
basis accounting.
2) What is the adjusting process? What accounts
normally require adjustment?
3) What is depreciation? What is depreciation
expense?
4) Discuss another topic from Chapter 3.

Expert Solution

Step 1

Cash system of accounting means where all expenses , losses , income and gain are recognized on the basis of whether the cash has been received (paid) or not. Cash system of accounting is not concerned with whether any income or expenses has been due or not.

Accrual system of accounting means where all expenses , losses , income and gain are recognized on the basis of whether it has become due or not. It is not related with actual cash payment (received).

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