Question

For each transaction, determine the amount of revenue or expenses, if any, that is recorded under accrual-basis accounting and under cash basis accounting?

Answer 1

Accrual-basis accounting and cash basis accounting are two different methods of recording revenue and expenses. Accrual-basis accounting records revenue when it is earned and expenses when they are incurred, while cash basis accounting records revenue when it is received and expenses when they are paid.

Step-by-step explanation:

Accrual-basis accounting and cash basis accounting are two different methods of recording revenue and expenses.

Under accrual-basis accounting, revenue is recorded when it is earned, regardless of whether payment has been received. Expenses are recorded when they are incurred, regardless of whether payment has been made. This method provides a more accurate representation of a company's financial position.

Under cash basis accounting, revenue is recorded when payment is received and expenses are recorded when payment is made. This method is simpler and easier to understand, but it may not provide an accurate picture of a company's financial position.