PARRISH  Ch. 4 ADJUSTMENTS AND RECOGNITIONWould 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 occur1) 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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Asked Jan 30, 2020
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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)

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Expert Answer

Step 1

1) Cash and recognition could occur together:

 

In this case, the cash flow (positive or negative) and recognition of revenue or expense will occur to...

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