Posted: February 16th, 2020
Accounting Cash Basis Assignment
1. What type of business would be more likely to use the cash basis of accounting? (5 pts) A. Dillards B. Caterpillar C. Jordan's Bike Shop D. Whataburger 2. Matching (each choice could be used more than once) (5 pts ea.) A. Accrual basis of accounting C. Cash basis of accounting Matches reporting of expenses to revenues when revenues are earned Reports net income as the difference between cash receipts and cash payments Requires making adjusting entries Reports revenues and expenses when cash is received or paid May to be used by companies that have few receivables and payables Does not allow for a clear picture of cash flow __ May distort reporting of the profitability of a company due to timing of payments 3. Your company does some work for a customer and received payment when the job contract was written on July 12th for work to be performed and completed on August 5 What month is the income recorded for a cash-basis company? (5 pts) What month is the income recorded for an accrual-basis company? (5 pts)
4. Selected transactional data of business are summarized below. $33,000 28,000 Service sales charged to customers on account during September Cash received from cash customers for services performed in September Cash received from customers on account during September Services performed and charged to customers prior to September Services performed and charged to customers during September Expenses incurred prior to September and paid during September Expenses incurred and paid in September Expenses incurred in September but not paid in September Expenses for supplies used and insurance (not included above) applicable to September 13,000 18,000 6,500 36,250 5,000 2,000 Determine the following amounts for September: (30 pts) HINT: the amounts can be revenue or expense under both methods, depending on the description of the transaction. Accrual Basis Accounting Cash Basis accounting Total revenue Total expense Net Income/(Loss) 5. Are adjusting entries used in a cash-basis or accrual basis accounting system? (5 pts) Identify one type of adjusting entry and the reason that the type of adjusting entry needs to be made. (15 pts) .
