Required:For each transaction, determine the amount of revenue or expense, if any, that is recorded under accrual-basis accounting and undercash-basis accounting.Accrual-BasisCash-BasisTransactionRevenue Expense Revenue Expense1. Receive cash from customers at the time of service, $3,000.$ 3,000$ 3,0002. Issue common stock for cash, $5,300.3. Receive cash from customers who were previously billed, $1,350.$ 1,3504. Incur utilities cost in the current month but do not pay, $530.5305. Pay workers' salaries for the current month, $630.$630$6306. Pay for rent one year in advance, $2,760.7. Repay a long-term note to the bank, $2,300.$ 2,7608. Pay workers' salaries for the previous month, $780.9. Pay dividends to stockholders, $430.78010. Purchase office supplies for cash, $470.$470%24

Answered: Required: For each transaction,…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter4: The Adjustment Process

Section: Chapter Questions

Problem 2PB: To demonstrate the difference between cash account activity and accrual basis profits (net income),...

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Required:
For each transaction, determine the amount of revenue or expense, if any, that is recorded under accrual-basis accounting and under
cash-basis accounting.
Accrual-Basis
Cash-Basis
Transaction
Revenue Expense Revenue Expense
1. Receive cash from customers at the time of service, $3,000.
$ 3,000
$ 3,000
2. Issue common stock for cash, $5,300.
3. Receive cash from customers who were previously billed, $1,350.
$ 1,350
4. Incur utilities cost in the current month but do not pay, $530.
530
5. Pay workers' salaries for the current month, $630.
$
630
$
630
6. Pay for rent one year in advance, $2,760.
7. Repay a long-term note to the bank, $2,300.
$ 2,760
8. Pay workers' salaries for the previous month, $780.
9. Pay dividends to stockholders, $430.
780
10. Purchase office supplies for cash, $470.
$
470
%24

Expert Solution

Step 1 Introduction:

Expense refers to the amount or cost which is incurred by the business to generate income or revenues. Expenses can be operating or non-operating in nature. Expenses include cost of direct materials, depreciation, utilities, rent, direct labor, selling and distribution and office and administrative expenses.

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