Accrual basis of accounting: In accrual basis of accounting, the company records all the transaction that brings changes in the financial statement of the company. In accrual basis of accounting, the revenue is recognized for the accounting period, in which the goods are sold, or the service performed even if cash is not exchanged. Similarly, the expenses are recognized for the accounting period in which the business incurred expenses, even if cash is not exchanged. Cash basis of accounting: Cash basis of accounting contradicts the accrual basis of accounting. In the cash basis of accounting, the business recognizes the revenues, only when they receive cash. Similarly, the business recognizes expenses, only when payments are made. To calculate: The net earnings for the Company G under the cash basis of accounting.

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Answer 1

Question

Chapter 4, Problem 4.5E

(a)

To determine

Accrual basis of accounting:

In accrual basis of accounting, the company records all the transaction that brings changes in the financial statement of the company. In accrual basis of accounting, the revenue is recognized for the accounting period, in which the goods are sold, or the service performed even if cash is not exchanged. Similarly, the expenses are recognized for the accounting period in which the business incurred expenses, even if cash is not exchanged.

Cash basis of accounting:

Cash basis of accounting contradicts the accrual basis of accounting. In the cash basis of accounting, the business recognizes the revenues, only when they receive cash. Similarly, the business recognizes expenses, only when payments are made.

To calculate: The net earnings for the Company G under the cash basis of accounting.

(b)

To determine

To identify: Which basis of accounting (either cash or accrual) provides more useful information to the decision makers.

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Cullumber Company uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1, 2025, Job 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $16,800, direct labor $10,080, and manufacturing overhead $13,440. As of January 1, Job 49 had been completed at a cost of $75,600 and was part of finished goods inventory. There was a $12,600 balance in the Raw Materials Inventory account on January 1. During the month of January, Cullumber Company began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were sold on account during the month for $102,480 and $132,720, respectively. The following additional events occurred during the month. 1. Purchased additional raw materials of $75,600 on account. 2. Incurred factory labor costs of $58,800. 3. Incurred manufacturing overhead costs as follows: depreciation expense on equipment $10,080; and various other…

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Answer 2

Question

Chapter 4, Problem 4.5E

(a)

To determine

Accrual basis of accounting:

In accrual basis of accounting, the company records all the transaction that brings changes in the financial statement of the company. In accrual basis of accounting, the revenue is recognized for the accounting period, in which the goods are sold, or the service performed even if cash is not exchanged. Similarly, the expenses are recognized for the accounting period in which the business incurred expenses, even if cash is not exchanged.

Cash basis of accounting:

Cash basis of accounting contradicts the accrual basis of accounting. In the cash basis of accounting, the business recognizes the revenues, only when they receive cash. Similarly, the business recognizes expenses, only when payments are made.

To calculate: The net earnings for the Company G under the cash basis of accounting.

(b)

To determine

To identify: Which basis of accounting (either cash or accrual) provides more useful information to the decision makers.

Expert Solution & Answer

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Answer 3

Question

Chapter 4, Problem 4.5E

(a)

To determine

Accrual basis of accounting:

In accrual basis of accounting, the company records all the transaction that brings changes in the financial statement of the company. In accrual basis of accounting, the revenue is recognized for the accounting period, in which the goods are sold, or the service performed even if cash is not exchanged. Similarly, the expenses are recognized for the accounting period in which the business incurred expenses, even if cash is not exchanged.

Cash basis of accounting:

Cash basis of accounting contradicts the accrual basis of accounting. In the cash basis of accounting, the business recognizes the revenues, only when they receive cash. Similarly, the business recognizes expenses, only when payments are made.

To calculate: The net earnings for the Company G under the cash basis of accounting.

(b)

To determine

To identify: Which basis of accounting (either cash or accrual) provides more useful information to the decision makers.

Expert Solution & Answer

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Answer 4

Question

Chapter 4, Problem 4.5E

(a)

To determine

Accrual basis of accounting:

In accrual basis of accounting, the company records all the transaction that brings changes in the financial statement of the company. In accrual basis of accounting, the revenue is recognized for the accounting period, in which the goods are sold, or the service performed even if cash is not exchanged. Similarly, the expenses are recognized for the accounting period in which the business incurred expenses, even if cash is not exchanged.

Cash basis of accounting:

Cash basis of accounting contradicts the accrual basis of accounting. In the cash basis of accounting, the business recognizes the revenues, only when they receive cash. Similarly, the business recognizes expenses, only when payments are made.

To calculate: The net earnings for the Company G under the cash basis of accounting.

(b)

To determine

To identify: Which basis of accounting (either cash or accrual) provides more useful information to the decision makers.

Expert Solution & Answer

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Answer 5

Chapter 4, Problem 4.5E

(a)

To determine

Accrual basis of accounting:

In accrual basis of accounting, the company records all the transaction that brings changes in the financial statement of the company. In accrual basis of accounting, the revenue is recognized for the accounting period, in which the goods are sold, or the service performed even if cash is not exchanged. Similarly, the expenses are recognized for the accounting period in which the business incurred expenses, even if cash is not exchanged.

Cash basis of accounting:

Cash basis of accounting contradicts the accrual basis of accounting. In the cash basis of accounting, the business recognizes the revenues, only when they receive cash. Similarly, the business recognizes expenses, only when payments are made.

To calculate: The net earnings for the Company G under the cash basis of accounting.

(b)

To determine

To identify: Which basis of accounting (either cash or accrual) provides more useful information to the decision makers.

Answer 6

Chapter 4, Problem 4.5E

(a)

To determine

Accrual basis of accounting:

In accrual basis of accounting, the company records all the transaction that brings changes in the financial statement of the company. In accrual basis of accounting, the revenue is recognized for the accounting period, in which the goods are sold, or the service performed even if cash is not exchanged. Similarly, the expenses are recognized for the accounting period in which the business incurred expenses, even if cash is not exchanged.

Cash basis of accounting:

Cash basis of accounting contradicts the accrual basis of accounting. In the cash basis of accounting, the business recognizes the revenues, only when they receive cash. Similarly, the business recognizes expenses, only when payments are made.

To calculate: The net earnings for the Company G under the cash basis of accounting.

Answer 7

Chapter 4, Problem 4.5E

(a)

To determine

Accrual basis of accounting:

In accrual basis of accounting, the company records all the transaction that brings changes in the financial statement of the company. In accrual basis of accounting, the revenue is recognized for the accounting period, in which the goods are sold, or the service performed even if cash is not exchanged. Similarly, the expenses are recognized for the accounting period in which the business incurred expenses, even if cash is not exchanged.

Cash basis of accounting:

Cash basis of accounting contradicts the accrual basis of accounting. In the cash basis of accounting, the business recognizes the revenues, only when they receive cash. Similarly, the business recognizes expenses, only when payments are made.

To calculate: The net earnings for the Company G under the cash basis of accounting.

Answer 8

(b)

To determine

To identify: Which basis of accounting (either cash or accrual) provides more useful information to the decision makers.

Answer 9

(b)

To determine

To identify: Which basis of accounting (either cash or accrual) provides more useful information to the decision makers.

Answer 10

Expert Solution & Answer

Answer 11

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Answer 12

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Answer 13

Ch. 4 - Prob. 1Q Ch. 4 - Identify and stale two generally accepted...Ch. 4 - Prob. 4Q Ch. 4 - Prob. 5Q Ch. 4 - Prob. 6Q Ch. 4 - Why may the financial information in an unadjusted...Ch. 4 - Distinguish between the two categories of...Ch. 4 - What types of accounts does a company debit and...Ch. 4 - Prob. 10Q Ch. 4 - Prob. 11Q

Solution Summary: The author explains the difference between cash and accrual basis of accounting, which provides more useful information to the decision makers.

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To identify: Which basis of accounting (either cash or accrual) provides more useful information to the decision makers.

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