Types of Accounting: There are two types of accounting which are followed by businesses: a. Accrual basis: When books of account are recorded basis on an estimation or anticipation of any expense it is known as accrual basis. This concept requires to account for an expense or an income as and when its accrued by following the prudence principle of accounting. b. Cash Basis: When books of accounts are recorded on the basis of actual cash receipt or payment. This method requires that the transactions should only be recorded when the cash has been received or is been expensed then only it should be accounted in the books. To identify: The Correct statement about accrual and cash basis of accounting

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 3, Problem 1QC

To determine

Types of Accounting:

There are two types of accounting which are followed by businesses:

a. Accrual basis: When books of account are recorded basis on an estimation or anticipation of any expense it is known as accrual basis. This concept requires to account for an expense or an income as and when its accrued by following the prudence principle of accounting.

b. Cash Basis: When books of accounts are recorded on the basis of actual cash receipt or payment. This method requires that the transactions should only be recorded when the cash has been received or is been expensed then only it should be accounted in the books.

To identify:

The Correct statement about accrual and cash basis of accounting

Expert Solution & Answer

Answer to Problem 1QC

Solution:

a. Accrual accounting records the revenue only when it is earned.

Explanation of Solution

Explanations:

• Accrual accounting records revenue only when it is earned: The principle of accrual accounting is that revenue is recognized when earned, and expenses are recognized when incurred hence the option given is correct.

• Accrual accounting is not allowed under GAAP: Accrual accounting is an important part of GAAP and it is allowed under GAAP therefore this option is incorrect.

• Cash basis accounting records all transactions: Cash basis of accounting does not records all the transactions it only records all the cash transaction. Therefore this option is also wrong.

• All options are true: Since option b and c are not correct therefore all options are not true.

Conclusion

From the given information and according to the calculation only option “a” is correct as accrual accounting records the revenue when it is earned and all other given options are wrong.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Sp25 ACCT X CengageNOWv2 | Online teaching X exhibit 6.4.jpg 71x399) x + bw.com/ilrn/takeAssignment/takeAssignmentMain.do?inprogress=true FIFO perpetual inventory The beginning inventory at Dunne Co. and data on purchases and sales for a three-month period ending June 30 are Number Date Transaction of Units Per Unit Total Apr. 3 Inventory 25 $1,200 $30,000 8 Purchase 75 1,240 93,000 11 Sale 40 2,000 80,000 30 Sale 30 2,000 60,000 May 8 Purchase 60 1,260 75,600 10 Sale 50 2,000 100,000 19 Sale 20 2,000 40,000 < 28 Purchase 80 1,260 100,800 June 5 Sale 40 2,250 90,000 16 Sale 25 2,250 56,250 21 Purchase 35 1,264 44,240 28 Sale 44 2,250 99,000 Required: 1. Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illust first-in, first-out method. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER un Check My Work 3 more Check My Work uses remaining Q Search hp

PLEASE HELP! NOTICE. THERE ARE FIVE CELLS ON THE LEFT SIDE TO FILL. THE DROPDOWN SHOWS THE OPTIONS FOR THESE CELLS.

Calm Ltd has the following data relating tò two investment projects, only one of which mayb e s e l e c t e d :The cost of capital is 10 per cent, and depreciation is calculated using straight line method.a . Calculate for each of the project:i. Average annual accounting rate of return on average capital investedi i . Net Present Valuei l l . I n t e r n a l R a t e o f Returnb. Discuss the relative merits of the methods of evaluation mentioned above in (a).Q.4a . In the context of process costing, discuss the following concepts briefly, i . Equivalent unitsNormal lossill. Abnormal lossi v. Joint productsV . By productsb . Discuss the different types of standard costing and objectives of standard costing.

Answer 2

Question

Chapter 3, Problem 1QC

To determine

Types of Accounting:

There are two types of accounting which are followed by businesses:

a. Accrual basis: When books of account are recorded basis on an estimation or anticipation of any expense it is known as accrual basis. This concept requires to account for an expense or an income as and when its accrued by following the prudence principle of accounting.

b. Cash Basis: When books of accounts are recorded on the basis of actual cash receipt or payment. This method requires that the transactions should only be recorded when the cash has been received or is been expensed then only it should be accounted in the books.

To identify:

The Correct statement about accrual and cash basis of accounting

Expert Solution & Answer

Answer to Problem 1QC

Solution:

a. Accrual accounting records the revenue only when it is earned.

Explanation of Solution

Explanations:

• Accrual accounting records revenue only when it is earned: The principle of accrual accounting is that revenue is recognized when earned, and expenses are recognized when incurred hence the option given is correct.

• Accrual accounting is not allowed under GAAP: Accrual accounting is an important part of GAAP and it is allowed under GAAP therefore this option is incorrect.

• Cash basis accounting records all transactions: Cash basis of accounting does not records all the transactions it only records all the cash transaction. Therefore this option is also wrong.

• All options are true: Since option b and c are not correct therefore all options are not true.

Conclusion

From the given information and according to the calculation only option “a” is correct as accrual accounting records the revenue when it is earned and all other given options are wrong.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 3, Problem 1QC

To determine

Types of Accounting:

There are two types of accounting which are followed by businesses:

a. Accrual basis: When books of account are recorded basis on an estimation or anticipation of any expense it is known as accrual basis. This concept requires to account for an expense or an income as and when its accrued by following the prudence principle of accounting.

b. Cash Basis: When books of accounts are recorded on the basis of actual cash receipt or payment. This method requires that the transactions should only be recorded when the cash has been received or is been expensed then only it should be accounted in the books.

To identify:

The Correct statement about accrual and cash basis of accounting

Expert Solution & Answer

Answer to Problem 1QC

Solution:

a. Accrual accounting records the revenue only when it is earned.

Explanation of Solution

Explanations:

• Accrual accounting records revenue only when it is earned: The principle of accrual accounting is that revenue is recognized when earned, and expenses are recognized when incurred hence the option given is correct.

• Accrual accounting is not allowed under GAAP: Accrual accounting is an important part of GAAP and it is allowed under GAAP therefore this option is incorrect.

• Cash basis accounting records all transactions: Cash basis of accounting does not records all the transactions it only records all the cash transaction. Therefore this option is also wrong.

• All options are true: Since option b and c are not correct therefore all options are not true.

Conclusion

From the given information and according to the calculation only option “a” is correct as accrual accounting records the revenue when it is earned and all other given options are wrong.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 3, Problem 1QC

To determine

Types of Accounting:

There are two types of accounting which are followed by businesses:

a. Accrual basis: When books of account are recorded basis on an estimation or anticipation of any expense it is known as accrual basis. This concept requires to account for an expense or an income as and when its accrued by following the prudence principle of accounting.

b. Cash Basis: When books of accounts are recorded on the basis of actual cash receipt or payment. This method requires that the transactions should only be recorded when the cash has been received or is been expensed then only it should be accounted in the books.

To identify:

The Correct statement about accrual and cash basis of accounting

Expert Solution & Answer

Answer to Problem 1QC

Solution:

a. Accrual accounting records the revenue only when it is earned.

Explanation of Solution

Explanations:

• Accrual accounting records revenue only when it is earned: The principle of accrual accounting is that revenue is recognized when earned, and expenses are recognized when incurred hence the option given is correct.

• Accrual accounting is not allowed under GAAP: Accrual accounting is an important part of GAAP and it is allowed under GAAP therefore this option is incorrect.

• Cash basis accounting records all transactions: Cash basis of accounting does not records all the transactions it only records all the cash transaction. Therefore this option is also wrong.

• All options are true: Since option b and c are not correct therefore all options are not true.

Conclusion

From the given information and according to the calculation only option “a” is correct as accrual accounting records the revenue when it is earned and all other given options are wrong.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 3, Problem 1QC

To determine

Types of Accounting:

There are two types of accounting which are followed by businesses:

a. Accrual basis: When books of account are recorded basis on an estimation or anticipation of any expense it is known as accrual basis. This concept requires to account for an expense or an income as and when its accrued by following the prudence principle of accounting.

b. Cash Basis: When books of accounts are recorded on the basis of actual cash receipt or payment. This method requires that the transactions should only be recorded when the cash has been received or is been expensed then only it should be accounted in the books.

To identify:

The Correct statement about accrual and cash basis of accounting

Expert Solution & Answer

Answer to Problem 1QC

Solution:

a. Accrual accounting records the revenue only when it is earned.

Explanation of Solution

Explanations:

• Accrual accounting records revenue only when it is earned: The principle of accrual accounting is that revenue is recognized when earned, and expenses are recognized when incurred hence the option given is correct.

• Accrual accounting is not allowed under GAAP: Accrual accounting is an important part of GAAP and it is allowed under GAAP therefore this option is incorrect.

• Cash basis accounting records all transactions: Cash basis of accounting does not records all the transactions it only records all the cash transaction. Therefore this option is also wrong.

• All options are true: Since option b and c are not correct therefore all options are not true.

Conclusion

From the given information and according to the calculation only option “a” is correct as accrual accounting records the revenue when it is earned and all other given options are wrong.

Answer 6

Chapter 3, Problem 1QC

To determine

Types of Accounting:

There are two types of accounting which are followed by businesses:

a. Accrual basis: When books of account are recorded basis on an estimation or anticipation of any expense it is known as accrual basis. This concept requires to account for an expense or an income as and when its accrued by following the prudence principle of accounting.

b. Cash Basis: When books of accounts are recorded on the basis of actual cash receipt or payment. This method requires that the transactions should only be recorded when the cash has been received or is been expensed then only it should be accounted in the books.

To identify:

The Correct statement about accrual and cash basis of accounting

Expert Solution & Answer

Answer to Problem 1QC

Solution:

a. Accrual accounting records the revenue only when it is earned.

Explanation of Solution

Explanations:

• Accrual accounting records revenue only when it is earned: The principle of accrual accounting is that revenue is recognized when earned, and expenses are recognized when incurred hence the option given is correct.

• Accrual accounting is not allowed under GAAP: Accrual accounting is an important part of GAAP and it is allowed under GAAP therefore this option is incorrect.

• Cash basis accounting records all transactions: Cash basis of accounting does not records all the transactions it only records all the cash transaction. Therefore this option is also wrong.

• All options are true: Since option b and c are not correct therefore all options are not true.

Conclusion

From the given information and according to the calculation only option “a” is correct as accrual accounting records the revenue when it is earned and all other given options are wrong.

Answer 7

Chapter 3, Problem 1QC

To determine

Types of Accounting:

There are two types of accounting which are followed by businesses:

a. Accrual basis: When books of account are recorded basis on an estimation or anticipation of any expense it is known as accrual basis. This concept requires to account for an expense or an income as and when its accrued by following the prudence principle of accounting.

b. Cash Basis: When books of accounts are recorded on the basis of actual cash receipt or payment. This method requires that the transactions should only be recorded when the cash has been received or is been expensed then only it should be accounted in the books.

To identify:

The Correct statement about accrual and cash basis of accounting

Answer 8

Expert Solution & Answer

Answer to Problem 1QC

Solution:

a. Accrual accounting records the revenue only when it is earned.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Explanations:

• Accrual accounting records revenue only when it is earned: The principle of accrual accounting is that revenue is recognized when earned, and expenses are recognized when incurred hence the option given is correct.

• Accrual accounting is not allowed under GAAP: Accrual accounting is an important part of GAAP and it is allowed under GAAP therefore this option is incorrect.

• Cash basis accounting records all transactions: Cash basis of accounting does not records all the transactions it only records all the cash transaction. Therefore this option is also wrong.

• All options are true: Since option b and c are not correct therefore all options are not true.

Answer 12

Conclusion

From the given information and according to the calculation only option “a” is correct as accrual accounting records the revenue when it is earned and all other given options are wrong.

Answer 13

Ch. 3 - Prob. 1QC Ch. 3 - Get Fit Now gains a client who prepays S540 for a...Ch. 3 - The revenue recognition principle requires...Ch. 3 - Adjusting the accounts is the process of Learning...Ch. 3 - Which of the following is an example of a deferral...Ch. 3 - Assume that the weekly payroll of In the Woods...Ch. 3 - Prob. 7QC Ch. 3 - A equity overstated income statement: expense...Ch. 3 - A worksheet Learning Objective 6 is a journal used...Ch. 3 - On February 1, Clovis Wilson Law Firm contracted...

Videos

Answer to Problem 1QC

Explanation of Solution

Want to see more full solutions like this?

Chapter 3 Solutions