Question

Which of the following accounts would be used under the accrual basis of accounting, but not under cash basis accounting?

A. Service Revenue
B. Cash
C. Unearned Revenue
D. Salaries Expense
E. None of the above

Answer 1

The correct answer is A. Service Revenue. Under the accrual basis of accounting, revenue is recognized when it is earned, regardless of when payment is received.

Step-by-step explanation:

The correct answer is A. Service Revenue.

Under the accrual basis of accounting, revenue is recognized when it is earned, regardless of when payment is received. Therefore, Service Revenue would be used under the accrual basis because it represents revenue earned for services provided, even if cash has not been received yet.

On the other hand, under the cash basis of accounting, revenue is only recognized when payment is received. Cash basis accounting focuses on cash transactions, so only Cash would be used under this method.