Under Accrual Basis

Ch.2- Accrual Accounting and Income Determination

Under accrual basis
-Revenues are earned when the seller completes performance required by an agreement.

QA- Flying Carpet Tourism company purchased some cares for 24, making a down payment of 14 and signed a note payable for the remaining. How do you record this on cash basis once and on accrual basis another.

Answer: Accrual basis: Expenses 24 Cash basis: Expenses 14

QB- Company A made sales revenue of 150 thousands Dirhams, only 100 thousands were collected in cash. How much revenue would be recognized under cash basis once and under accrual basis another.

Answer: Accrual basis: Revenue 150 Cash basis: Revenue 100

QC- The company
Canon delivers the copiers to Title on October 20; Title pays $16,000, and agrees to pay the balance on November 10.

|1. |Refer to Table 2-1. Under the cash basis, how much revenue is recognized in October? |
| |a. $ 0 |
| |b. $ 16,000 |
| |c. $ 24,000 |
| |d. $ 40,000 |
|2. |Refer to Table 2-1. Under the accrual basis, how much revenue is recognized in November? |
| |a. $ 0 |
| |b. $ 16,000