The primary difference between accrual-basis and cash-basis accounting is: Multiple Choice O O Accrual-basis accounting is not part of generally accepted accounting principles (GAAP). Under accrual-basis accounting, an attempt is made to record economic events as they occur, regardless of when cash is received or paid. Cash-basis accounting is allowed for financial reporting purposes but not accrual-basis accounting. Adjusting entries are only a necessary part of cash-basis accounting.

The primary difference between accrual-basis and cash-basis accounting is: Multiple Choice O O Accrual-basis accounting is not part of generally accepted accounting principles (GAAP). Under accrual-basis accounting, an attempt is made to record economic events as they occur, regardless of when cash is received or paid. Cash-basis accounting is allowed for financial reporting purposes but not accrual-basis accounting. Adjusting entries are only a necessary part of cash-basis accounting.

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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Similar questions

Which accounting principle requires that expenses be matched with revenues? a) Revenue Recognition Principle b) Matching Principle c) Historical Cost Principle d) Full Disclosure Principle
The revenue recognition principle states that revenue should be recorded in the same period as the cash is received. O True O False
Explain accrual basis accounting, and when to recognize revenues and expenses and how it differs from cash accounting. Provide a detailed example of a business that may use cash accounting.
Statement 1: In case there is a credit balance in a customer's account, such amount shall not affect the total balance of the accounts receivable to be presented in the asset section of the statement of financial position.Statement 2: A credit balance in a customer's account is caused by overcollection of amounts receivable from customers which will result to a liability to be presented in the noncurrent section of statement of financial position.Which statement(s) is(are) correct?
Due to which concept, accounting does not record non-financial transactions? a. Going concern concept b. Accrual concept O C. Money measurement concept o d. Cost concept
Under the modified accrual basis of accounting, expenditures generally are not recognized until: O a. They are paid in cash. O b. An obligation is incurred that will be paid from currently available financial resources. O c. Goods or services are ordered. O d. They are approved by the legislative body.
Which sentence is incorrect? Select one: a. Cash-basis accounting is not in accordance with generally accepted accounting principles. b. In the Accrual-Basis Accounting, expenses are recognized when incurred. c. In the Cash-Basis Accounting, Revenues recognized when cash is received. d. According to the GAAP in Accrual-Basis Accounting, companies recognize revenues when they record cash receipts for their services.
Which sentence is incorrect? Select one: a. According to the GAAP in Accrual-Basis Accounting, companies recognise revenues when they perform for their services. b.The Accrual and Cash-basis accounting are in accordance with generally accepted accounting principles. c.In the Accrual-Basis Accounting, expenses are recognized when incurred. d. IFRS & GAAP use the same process for recording transactions.
An item or information is considered MATERIAL in accounting if a. Its non-disclosure would influence the decisions of the users of financial statements b. Its non-disclosure would not influence the decisions of the users of financial statements c. Both of the options d. None of the options
What is the indirect effect of a change in accounting policy? Briefly describe the approach to reporting the indirect effects of a change in accounting policy under IFRS.
True or False: Under the accrual accounting method, revenue is recognized when cash is received, regardless of when the goods or services are delivered.