Which of the following is true of accrual basis accounting and cash basis accounting? a. Accrual accounting records revenue only when it is earned. b. Accrual accounting is not all owed under GAAP. c. Cash basis accounting records all transaction s. d. All of the above are true.

Question

Want to see more full solutions like this?

Answer 1

Textbook Question

Chapter 3, Problem 1QC

Which of the following is true of accrual basis accounting and cash basis accounting?

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

b. Accrual accounting is not all owed under GAAP.

c. Cash basis accounting records all transaction s.

d. All of the above are true.

Expert Solution & Answer

To determine

Cash basis accounting:

According to cash-basis accounting, revenues and expenses are recorded when there is an exchange of cash.

Accrual basis accounting:

According to this basis of accounting, revenue should be recognized at the time when it is earned, it doesn’t matter that cash is received or not and expense should be recognized when it is incurred, it doesn’t matter that cash is paid or not.

To identify: The given statement which is true of accrual basis accounting and cash basis accounting.

Answer to Problem 1QC

“Option a” of accrual accounting records revenue only when it is earned is true of accrual basis accounting.

Explanation of Solution

Justification for incorrect answers:

Option b – is incorrect, because only accrual basis accounting is allowed by GAAP (Generally Accepted Accounting Principle), but not cash basis accounting.

Option c – is incorrect, because all transactions are not recorded under cash basis accounting, only transactions related to cash receipts and payments are recorded under cash basis accounting.

Option d – is incorrect, because all of the given options are not true.

Justification for correct answer:

Option a – is correct, as revenues would be recorded only when it is earned as per accrual accounting principle.

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

No AI The accounting principle that requires matching revenues with related expenses is the:A. Going Concern PrincipleB. Matching PrincipleC. Cost PrincipleD. Full Disclosure Principle

Revenue is recognized in the accounting records when it is:A. CollectedB. EarnedC. DepositedD. Reported

The accounting principle that requires matching revenues with related expenses is the:A. Going Concern PrincipleB. Matching PrincipleC. Cost PrincipleD. Full Disclosure Principle

Answer 2

Textbook Question

Chapter 3, Problem 1QC

Which of the following is true of accrual basis accounting and cash basis accounting?

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

b. Accrual accounting is not all owed under GAAP.

c. Cash basis accounting records all transaction s.

d. All of the above are true.

Expert Solution & Answer

To determine

Cash basis accounting:

According to cash-basis accounting, revenues and expenses are recorded when there is an exchange of cash.

Accrual basis accounting:

According to this basis of accounting, revenue should be recognized at the time when it is earned, it doesn’t matter that cash is received or not and expense should be recognized when it is incurred, it doesn’t matter that cash is paid or not.

To identify: The given statement which is true of accrual basis accounting and cash basis accounting.

Answer to Problem 1QC

“Option a” of accrual accounting records revenue only when it is earned is true of accrual basis accounting.

Explanation of Solution

Justification for incorrect answers:

Option b – is incorrect, because only accrual basis accounting is allowed by GAAP (Generally Accepted Accounting Principle), but not cash basis accounting.

Option c – is incorrect, because all transactions are not recorded under cash basis accounting, only transactions related to cash receipts and payments are recorded under cash basis accounting.

Option d – is incorrect, because all of the given options are not true.

Justification for correct answer:

Option a – is correct, as revenues would be recorded only when it is earned as per accrual accounting principle.

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

Textbook Question

Chapter 3, Problem 1QC

Which of the following is true of accrual basis accounting and cash basis accounting?

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

b. Accrual accounting is not all owed under GAAP.

c. Cash basis accounting records all transaction s.

d. All of the above are true.

Expert Solution & Answer

To determine

Cash basis accounting:

According to cash-basis accounting, revenues and expenses are recorded when there is an exchange of cash.

Accrual basis accounting:

According to this basis of accounting, revenue should be recognized at the time when it is earned, it doesn’t matter that cash is received or not and expense should be recognized when it is incurred, it doesn’t matter that cash is paid or not.

To identify: The given statement which is true of accrual basis accounting and cash basis accounting.

Answer to Problem 1QC

“Option a” of accrual accounting records revenue only when it is earned is true of accrual basis accounting.

Explanation of Solution

Justification for incorrect answers:

Option b – is incorrect, because only accrual basis accounting is allowed by GAAP (Generally Accepted Accounting Principle), but not cash basis accounting.

Option c – is incorrect, because all transactions are not recorded under cash basis accounting, only transactions related to cash receipts and payments are recorded under cash basis accounting.

Option d – is incorrect, because all of the given options are not true.

Justification for correct answer:

Option a – is correct, as revenues would be recorded only when it is earned as per accrual accounting principle.

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

Textbook Question

Chapter 3, Problem 1QC

Which of the following is true of accrual basis accounting and cash basis accounting?

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

b. Accrual accounting is not all owed under GAAP.

c. Cash basis accounting records all transaction s.

d. All of the above are true.

Expert Solution & Answer

To determine

Cash basis accounting:

According to cash-basis accounting, revenues and expenses are recorded when there is an exchange of cash.

Accrual basis accounting:

According to this basis of accounting, revenue should be recognized at the time when it is earned, it doesn’t matter that cash is received or not and expense should be recognized when it is incurred, it doesn’t matter that cash is paid or not.

To identify: The given statement which is true of accrual basis accounting and cash basis accounting.

Answer to Problem 1QC

“Option a” of accrual accounting records revenue only when it is earned is true of accrual basis accounting.

Explanation of Solution

Justification for incorrect answers:

Option b – is incorrect, because only accrual basis accounting is allowed by GAAP (Generally Accepted Accounting Principle), but not cash basis accounting.

Option c – is incorrect, because all transactions are not recorded under cash basis accounting, only transactions related to cash receipts and payments are recorded under cash basis accounting.

Option d – is incorrect, because all of the given options are not true.

Justification for correct answer:

Option a – is correct, as revenues would be recorded only when it is earned as per accrual accounting principle.

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

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

To determine

Cash basis accounting:

According to cash-basis accounting, revenues and expenses are recorded when there is an exchange of cash.

Accrual basis accounting:

According to this basis of accounting, revenue should be recognized at the time when it is earned, it doesn’t matter that cash is received or not and expense should be recognized when it is incurred, it doesn’t matter that cash is paid or not.

To identify: The given statement which is true of accrual basis accounting and cash basis accounting.

Answer to Problem 1QC

“Option a” of accrual accounting records revenue only when it is earned is true of accrual basis accounting.

Explanation of Solution

Justification for incorrect answers:

Option b – is incorrect, because only accrual basis accounting is allowed by GAAP (Generally Accepted Accounting Principle), but not cash basis accounting.

Option c – is incorrect, because all transactions are not recorded under cash basis accounting, only transactions related to cash receipts and payments are recorded under cash basis accounting.

Option d – is incorrect, because all of the given options are not true.

Justification for correct answer:

Option a – is correct, as revenues would be recorded only when it is earned as per accrual accounting principle.

Answer 8

Expert Solution & Answer

To determine

Cash basis accounting:

According to cash-basis accounting, revenues and expenses are recorded when there is an exchange of cash.

Accrual basis accounting:

According to this basis of accounting, revenue should be recognized at the time when it is earned, it doesn’t matter that cash is received or not and expense should be recognized when it is incurred, it doesn’t matter that cash is paid or not.

To identify: The given statement which is true of accrual basis accounting and cash basis accounting.

Answer to Problem 1QC

“Option a” of accrual accounting records revenue only when it is earned is true of accrual basis accounting.

Explanation of Solution

Justification for incorrect answers:

Option b – is incorrect, because only accrual basis accounting is allowed by GAAP (Generally Accepted Accounting Principle), but not cash basis accounting.

Option c – is incorrect, because all transactions are not recorded under cash basis accounting, only transactions related to cash receipts and payments are recorded under cash basis accounting.

Option d – is incorrect, because all of the given options are not true.

Justification for correct answer:

Option a – is correct, as revenues would be recorded only when it is earned as per accrual accounting principle.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

To determine

Cash basis accounting:

According to cash-basis accounting, revenues and expenses are recorded when there is an exchange of cash.

Accrual basis accounting:

According to this basis of accounting, revenue should be recognized at the time when it is earned, it doesn’t matter that cash is received or not and expense should be recognized when it is incurred, it doesn’t matter that cash is paid or not.

To identify: The given statement which is true of accrual basis accounting and cash basis accounting.

Answer 12

Answer to Problem 1QC

“Option a” of accrual accounting records revenue only when it is earned is true of accrual basis accounting.

Answer 13

Explanation of Solution

Justification for incorrect answers:

Option b – is incorrect, because only accrual basis accounting is allowed by GAAP (Generally Accepted Accounting Principle), but not cash basis accounting.

Option c – is incorrect, because all transactions are not recorded under cash basis accounting, only transactions related to cash receipts and payments are recorded under cash basis accounting.

Option d – is incorrect, because all of the given options are not true.

Justification for correct answer:

Option a – is correct, as revenues would be recorded only when it is earned as per accrual accounting principle.

Answer 14

Ch. 3 - Which of the following is true of accrual basis...Ch. 3 - Get Fit Now gains a client who prepays 540 for a...Ch. 3 - The revenue recognition principle requires a. time...Ch. 3 - Adjusting the accounts is the process of a....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 - The adjusted trial balance shows a. amounts that...Ch. 3 - A D Window Cleaning performed 450 of services but...Ch. 3 - A worksheet a. is a journal used to record...Ch. 3 - On February 1, Clovis Wilson Law Firm contracted...

Which of the following is true of accrual basis accounting and cash basis accounting? a. Accrual accounting records revenue only when it is earned. b. Accrual accounting is not all owed under GAAP. c. Cash basis accounting records all transaction s. d. All of the above are true.

Videos

Answer to Problem 1QC

Explanation of Solution

Want to see more full solutions like this?

Chapter 3 Solutions