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

Not use ai solution please given answer

For the past year, Vivace Corporation recorded sales of $500,000 and average operating assets of $350,000. What is the margin that Vivace Corporation needed to earn in order to achieve an ROI of 25%?

General Accounting Question with Explanation need humble solution

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