Use the following transactions to answer questions 17 - 19 Determine the amount of revenue or expense that would be reported at the time of the transaction under the two methods. An example transaction has been completed fo you. Example: Purchased office supplies for cash, $440 Transaction Accrual-basis Cash-basis Revenue Expense Revenue Expense example Purchased office supplies for cash, $440 (no accrued expense, hasn't been used yet...cash flowed for the operating cost so it's a cash expense) SO SO SO $440 17. Issue common stock for $10,000 cash Received $5,000 cash from customers who were previously billed. 18. Pay $12,000 in workers' salaries for the current month. 19.
Use the following transactions to answer questions 17 - 19 Determine the amount of revenue or expense that would be reported at the time of the transaction under the two methods. An example transaction has been completed fo you. Example: Purchased office supplies for cash, $440 Transaction Accrual-basis Cash-basis Revenue Expense Revenue Expense example Purchased office supplies for cash, $440 (no accrued expense, hasn't been used yet...cash flowed for the operating cost so it's a cash expense) SO SO SO $440 17. Issue common stock for $10,000 cash Received $5,000 cash from customers who were previously billed. 18. Pay $12,000 in workers' salaries for the current month. 19.
Survey of Accounting (Accounting I)
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Author:Carl Warren
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Chapter3: Basic Accounting Systems: Accrual Basis
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Problem 2SEQ: On January 24, 20Y8, Niche Consulting collected $5,700 it had hilled its clients for services...
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Transcribed Image Text:Use the following transactions to answer questions 17
- 19
Determine the amount of revenue or expense that would
be reported at the time of the transaction under the two
methods. An example transaction has been completed for
you.
Example: Purchased office supplies for cash, $440
Transaction
Accrual-basis
Cash-basis
Revenue Expense Revenue Expense
example Purchased office supplies for cash,
$440 (no accrued expense, hasn't been
used yet...cash flowed for the operating
cost so it's a cash expense)
$O
$440
17.
Issue common stock for $10,000 cash
Received $5,000 cash from customers who
were previously billed.
18.
Pay $12,000 in workers' salaries for the current
month.
19.
Expert Solution
Step 1
The accrual method is where revenue or an expense is recorded at the occurrence of the transaction and when actual cash is not received or paid, as the case may be.
The cash method records the transaction only when actual cash is either paid or received.
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