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J. true or false In cash as contrasted with accrual accounting a company does not record amounts due from customers in its accounting records.?
Wiki User
∙ 16y ago
True. Under the Cash Basis for Accounting only transactions that involve the movement of cash are recorded. In Accrual Accounting (GAAP) you would record transactions once an economic event has taken place (e.g., supplier invoice received = expense, customer invoice prepared = revenue).
Wiki User
∙ 16y ago
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What is the function of reversing entries in accounting cycle?
A reversing entry removes an estimate when the actual amounts are known. For example, if you accrued your telephone bill at the end of the month, you would reverse the accrual in the following month when you receive and post the actual telephone bill.
What accounting principle requires revenue to be reported when earned?
In GAAP there are two basic accounting principles. The first being Accrual (which is the most commonly used) and the second being Cash Basis.Neither stipulate that income has to be "earned" before it is reported. The difference in the two are:Accrual basis accounting transactions are reported as they happen.1. For example, a contractor gets paid to remodel a home, he's received the money for the job, but hasn't earned it, completed the work. Accrual account states that this transaction be recorded as a liability (unearned revenue) to the company until the revenue is earned.2. Say the opposite is true in accrual accounting, the contractor finished the remodeling but isn't expected to be paid for it until later in the future. The company records this transaction as an asset (account receivable).Now let's look at Cash Basis: Cash basis states that a transaction didn't actually happen until such time the money is received, period. Take example 1, a transaction in cash basis accounting is recorded because money was actually received, even though it hasn't been earned.Example number 2 however, would be no recording of the transaction, although the job was finished, no money exchanged hands as of yet.This is why many businesses use accrual accounting. Only small companies that generally deal in cash or small amounts tend to lean toward cash basis accounting and it is still not recognized as a very good method of accounting by the GAAP.
Which cost amounts can be found in a firm's accounting records?
sunk cost
What do current liabilities mean in accounting?
Current Liabilities in accounting are amounts that are owed by a business. The two types of current liabilities are short-term and long-term liabilities.
What is the difference between expenses and expenditure in accounting?
Expenses are those amounts the benefits of which have already taken by company while expenditures are those amounts the benefits of which will be taken in future
What financial statement does not report amounts primarily on accrual basis?
statement of cash flows
What is the function of reversing entries in accounting cycle?
A reversing entry removes an estimate when the actual amounts are known. For example, if you accrued your telephone bill at the end of the month, you would reverse the accrual in the following month when you receive and post the actual telephone bill.
What accounting principle requires revenue to be reported when earned?
In GAAP there are two basic accounting principles. The first being Accrual (which is the most commonly used) and the second being Cash Basis.Neither stipulate that income has to be "earned" before it is reported. The difference in the two are:Accrual basis accounting transactions are reported as they happen.1. For example, a contractor gets paid to remodel a home, he's received the money for the job, but hasn't earned it, completed the work. Accrual account states that this transaction be recorded as a liability (unearned revenue) to the company until the revenue is earned.2. Say the opposite is true in accrual accounting, the contractor finished the remodeling but isn't expected to be paid for it until later in the future. The company records this transaction as an asset (account receivable).Now let's look at Cash Basis: Cash basis states that a transaction didn't actually happen until such time the money is received, period. Take example 1, a transaction in cash basis accounting is recorded because money was actually received, even though it hasn't been earned.Example number 2 however, would be no recording of the transaction, although the job was finished, no money exchanged hands as of yet.This is why many businesses use accrual accounting. Only small companies that generally deal in cash or small amounts tend to lean toward cash basis accounting and it is still not recognized as a very good method of accounting by the GAAP.
Which cost amounts can be found in a firm's accounting records?
sunk cost
How is math related to accounting?
Math is related to accounting because they both pertain to numbers. Accounting deals with money amounts, which is a large part of math.
how is rents and rates recorded in adjusting entries?
In adjusting entries, rents and rates are typically recorded to recognize any prepaid or accrued amounts related to these expenses. If rent has been paid in advance, it's adjusted to reflect the portion that corresponds to the current accounting period. Conversely, if rent is owed but not yet paid, an accrual is made to recognize the expense for the period. Adjusting entries ensure that the company's financial statements accurately reflect the expenses incurred during the accounting period.
What is the definition of 'cost concept'?
" Under the Cost Concept, amounts are initially recorded in the accounting records or purchase price," Introduction to Accounting and Business by Warren, Reeve and Duchac.
What do current liabilities mean in accounting?
Current Liabilities in accounting are amounts that are owed by a business. The two types of current liabilities are short-term and long-term liabilities.
What is it called when customers pay small amounts over a period of time?
increments
What is the difference between expenses and expenditure in accounting?
Expenses are those amounts the benefits of which have already taken by company while expenditures are those amounts the benefits of which will be taken in future
Which accounting concept or principle specifically states that you should record transactions at amounts that can be verified?
revenue recognition
What are Amounts to be paid in 10 days to suppliers in accounting called?
When you carry a balance and accept supplies from a supplier that require payment within 10 days, the accounting term is net 10.
