Versus Cash Basis of AccountingWhich of the following would justify a company using a cash basis of accounting while still adhering to GAAP?O If it makes extensive use of credit for sales and purchases.O If it has sales under $2,000,000.O If it does not have accountants on staff.O Cash basis of accounting is never acceptable under GAAP.

The objective of the question is to identify the circumstances under which a company can use a cash…

Answered: Versus Cash Basis of Accounting Which…

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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Why do organizations have policies regarding the use of assets and why do staff need to be aware of them and other organizational policies, procedures and accounting standards? Internal control is enhanced by combining the control of a transaction with the record-keeping function.a.True.b. False. For efficiency of operations and better control over cash, a company should maintain only one bank account. i. True. ii. False.
Which of the following statements is not correct?(1) Bank charges are not zero-rated item.(2) Input VAT is claimable on bank charges.(3) Bank charges are not exempt supply.(4) Input VAT is not claimable on bank charges.(5) Finance costs are exempt supply.
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E8B. ACCOUNTING CONNECTION Developing a convenient means of reimbursing sales representatives with cash for their incidental expenses, such as for meals and supplies, is a problem many companies face. Under one company's plan, the sales representatives submit the receipts for reimbursement to the petty cash custodian. The representative then receives cash from the petty cash fund. What is the weak point in this system? What fundamental principle of internal con- trol is being ignored? What improvement in the procedure can you suggest?
eceivables arise due to a deferred sale, and companies are often unable to collect all their debts, which means that part of those debts may become non-existent or there is doubt about the possibility of collection. 1- What is the difference between bad debts and doubtful debts? 2- Draft an example (supported by numbers) to explain the method of doubtful debts in dealing with bad debts, provided that the explanation includes accounting restrictions and the impact on the financial statements? 3- Explain why the use of the direct method (bad debt method) conflicts with generally accepted accounting principles? 4- One of the methods for estimating doubtful debts is the deferred sales method, the receivables balance method, and the receivables aging method. Required: Formulate an example (enhanced by numbers) to explain the method of aging receivables in estimating doubtful debts, taking into account the following: (1) the number of clients should be 10 clients, (2) the percentages…
Some believe that International Financial Reporting Standards (IFRS) provide too many choices within its accounting guidance. Is this a possible concern in the area of cash flow reporting in your opinion?
The new bookkeeper forgot to record the payment of an accounts payable to a supplier. What impact does this have on the company’s books? No effect Cash is understated/the Income Statement is understated Cash is overstated/the Income Statement is overstated Cash is overstated/liabilities are understated Cash is overstated/liabilities are overstated
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