Question

5. d. $5,120 Toole Company had the following transactions during 2020: Sales of $4,200 on account Collected $2,600 for services to be performed in 2021 Paid $1,630 cash in salaries Purchased airline tickets for $450 in December for a trip to take place in 2021 What is Toole's 2020 net income using cash basis accounting? a $520. b. $970 c. $4,720. d. $5,170 Adjusting entries are required a because some costs expire with the passage of time and have not yet been journalized. b. when the company's profits are below the budget. c. when expenses are recorded in the period in which they are incurred. d. when revenues are recorded in the period in which services are performed. Expenses incurred but not yet paid or recorded are called a. prepaid expenses. b. accrued expenses. interim expenses. d. unearned expenses. Unearned revenues are a. revenues not recorded as revenues until services are performed. b. revenues for services already performed, and recorded as liabilities, before they are received. C. revenues for services performed but not yet received in cash or recorded. revenues for services already performed and received in cash, and recorded as revenues when receiv

Answer 1

5	a. $520
	Net Income using cash basis accounting
	Sales	$2,600
	Salaries	-$1,630
	Air ticket (Travelling )	-$450
	Net Income	$520
6	a.because some costs expire with the passage of time and have not yet been journalized
7	b. accrued expenses
8	a. revenues not recorded as revenues until services are performed