Based on the information shown below, calculate for the year ended December 31, 2021,(a) the total amount of expenditures that would be recognized when using the currentfinancial resources measurement focus and modified accrual basis of accounting, and(b) the total amount of expenses that would be recognized using the economic resourcesmeasurement focus and accrual basis of accounting.Salaries paid in cash during 2021$6,000,000Salaries applicable to 2021, due to be paid January 5, 202240,000Utility bill applicable to 2021, due to be paid January 10, 202220,000Equipment acquired at the beginning of 2021 and having an estimated useful life of 10 years400,000Payment of principal on long-term debt on December 31, 2021200,000Payment of interest on long-term debt on December 31, 202180,000

The question is based on the concept of Business Accounting.

Answered: Based on the information shown below,…

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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Question

Based on the information shown below, calculate for the year ended December 31, 2021,
(a) the total amount of expenditures that would be recognized when using the current
financial resources measurement focus and modified accrual basis of accounting, and
(b) the total amount of expenses that would be recognized using the economic resources
measurement focus and accrual basis of accounting.

Salaries paid in cash during 2021	$6,000,000
Salaries applicable to 2021, due to be paid January 5, 2022	40,000
Utility bill applicable to 2021, due to be paid January 10, 2022	20,000
Equipment acquired at the beginning of 2021 and having an estimated useful life of 10 years	400,000
Payment of principal on long-term debt on December 31, 2021	200,000
Payment of interest on long-term debt on December 31, 2021	80,000