PARRISH Ch. 4 ADJUSTMENTS AND RECOGNITION Would you please explain the following to me in to help me have a better understanding? Revenue and expenses are not always accompanied by cash flow. Three of the following scenarios can occur 1) The cash and recognition could occur together. In this case recognition of revenue or expense is offset by the cash flow (Please explain and give an example) 2) Company may have earned revenue or used something but cash has not been received or paid. In this case recognition precedes cash flow. Can't use cash so use accounts that indicate cash is owed, these are called accruals. ( Please clarify and explain) 3) Relationship between recognition and cash flow occurs when the cash flow occurs before the recognition can be recorded. (Explain and give an example pleae)
PARRISH Ch. 4 ADJUSTMENTS AND RECOGNITION
Would you please explain the following to me in to help me have a better understanding?
Revenue and expenses are not always accompanied by
1) The cash and recognition could occur together. In this case recognition of revenue or expense is offset by the cash flow (Please explain and give an example)
2) Company may have earned revenue or used something but cash has not been received or paid. In this case recognition precedes cash flow. Can't use cash so use accounts that indicate cash is owed, these are called accruals. ( Please clarify and explain)
3) Relationship between recognition and cash flow occurs when the cash flow occurs before the recognition can be recorded. (Explain and give an example pleae)
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