Problem

(L.OBJ. 1) Comparing accrual and cash basis accounting [5 min] The Michelle Cook Law Fi...

(L.OBJ. 1) Comparing accrual and cash basis accounting [5 min]

The Michelle Cook Law Firm uses a client database. Suppose Michelle Cook paid $5,000 for a computer.

Requirements

1. Describe how the business should account for the $5,000 expenditure under

a. the cash basis.

b. the accrual basis.

2. State why the accrual basis is more realistic for this situation.

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