Why is it necessary to define a basis of accounting? (think accrual basis vs. cash basis)
Why is it necessary to define a basis of accounting? (think accrual basis vs. cash basis)
Homework Answers
ANSWER
THE BASIS OF ACCOUNTING IS NEEDED TO MAINTAIN BOOKS OF ACCOUNTS AND PREPARE FINANCIAL STATEMENTS WHICH REPRESENT TRUE AND FAIR VIEW OF THE ORGANISATIONS, AND WHICH CAN HELP MANAGEMENT TO UNDERSTAND THE EFFICIENCY AND EFFECTIVENESS WITH WHICH THEY ARE RUNNING AN ORGANISATION.
TO PREPARE FINANCIAL STATEMENTS, THERE SHOULD BE PROPER BASIS OF ACCOUNTING
1. CASH BAIS OF ACCOUNTING - TO RECORD ALL TRANSACTIONS WHICH INVOLVE CASH RECEIVED / PAID DURING THE PERIOD, WHETHER OR NOT PERTAINING TO THAT PARTICULAR PERIOD OR NOT.
2. ACCRUAL BASIS OF ACCOUNTING - O RECORD TRANSACTION PERTAINING TO THAT PERIOD, IRRESPECTIVE OF WHETHER OR NOT CASH IS BEING PAID / RECEIVED.
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Why is it necessary to define a basis of accounting? (think
accrual basis vs. cash basis)
Explain the difference between accrual basis accounting and cash basis accounting. Accrual basis accounting reports revenues...
Explain the difference between accrual basis accounting and cash basis accounting. Accrual basis accounting reports revenues and expenses when cash is received or paid Cash basis accounting reports revenues and expenses in the period in which a service has been performed when cash is received or paid in the period in which a service has been performed
Why is it necessary to convert accrual-based net income to a cash basis when preparing a...
Why is it necessary to convert accrual-based net income to a cash basis when preparing a statement of cash flows?
a) Why is the accrual basis of accounting generally preferred over the cash basis? b) What...
a) Why is the accrual basis of accounting generally preferred over the cash basis? b) What is a prepaid expense and where is it reported in the financial statements? c) What type of assets requires adjusting entries to record depreciation? d) What contra account is used when recording and reporting the effects of depreciation? Why is it used?
Describe accounting methods, cash basis and accrual basis.
Describe accounting methods, cash basis and accrual basis.
Completely and Precisely Define the Following Terms The accrual basis of accounting: The Matching principle: Name...
Completely and Precisely Define the Following Terms The accrual basis of accounting: The Matching principle: Name and define one type of adjusting entry where cash is paid (or received): Name and Define one type of adjusting entry where cash is paid (or received): Adjusted Trial balance:
Which of the following statements about cash basis accounting and accrual basis accounting is correct? Multiple...
Which of the following statements about cash basis accounting and accrual basis accounting is correct? Multiple Choice 1 O If payment is received at the same time a service is provided, it does not matter whether cash basis accounting or accrual basis accounting is used; both would record the transaction with the same journal entry The cash basis of accounting works best when a lengthy delay exists between the timing of cash flows and the underlying business activities to which...
Compared to the accrual basis of accounting, the cash basis of accounting overstates income by the...
Compared to the accrual basis of accounting, the cash basis of accounting overstates income by the net increase during the accounting period of the Accounts Receivable Accrued Expenses Payable No No No Yes Yes No Yes No Yes No Yes Yes
Discuss the cash basis of accounting versus the accrual basis of accounting. Include * examples and...
Discuss the cash basis of accounting versus the accrual basis of accounting. Include * examples and references to any relevant principles. (3 marks)
Discuss the difference in Accrual and Cash Basis for accounting.
Discuss the difference in Accrual and Cash Basis for accounting.
Goal: Ch 1, Cash-basis vs. accrual-basis accounting equation (pp. 14-15). 1. Consider the following two cash-basis...
Goal: Ch 1, Cash-basis vs. accrual-basis accounting equation (pp. 14-15). 1. Consider the following two cash-basis equations: 1 Assets/Resources = Shareholders’ Equity (SHE) 2 Cash = Contributed Capital + Earned Capital a. The second equation simply portrays assets (or resources) from the first equation as containing one component, Cash; and Shareholders’ Equity from the first equation as containing two components: 1) contributed capital, and 2) earned capital. b. Owners contribute capital to the business, with the expectation that managers will...
Explain the difference between accrual basis accounting and cash basis accounting. Accrual basis accounting reports revenues and expenses when cash is received or paid Cash basis accounting reports revenues and expenses in the period in which a service has been performed when cash is received or paid in the period in which a service has been performed
Which of the following statements about cash basis accounting and accrual basis accounting is correct? Multiple Choice 1 O If payment is received at the same time a service is provided, it does not matter whether cash basis accounting or accrual basis accounting is used; both would record the transaction with the same journal entry The cash basis of accounting works best when a lengthy delay exists between the timing of cash flows and the underlying business activities to which...
Discuss the cash basis of accounting versus the accrual basis of accounting. Include * examples and references to any relevant principles. (3 marks)
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