Concept explainers
(a)
Accrual basis of accounting:
In accrual Basis of accounting, the company records all the transaction that brings changes in the financial statement of the company. In accrual basis of accounting, the revenue is recognized for the accounting period, in which the goods are sold, or the service performed even if cash is not exchanged. Similarly the expenses are recognized for the accounting period, in which the business incurred expenses even if cash is not exchanged.
To identify: The accounts of Company C, which provide evidence that Company C uses accrual accounting.
The income statement account of Company C, which would be affected by the adjustments process.
(b)
To identify: The accounts of Company VF, which provide evidence that Company VF uses accrual accounting.
The accounts of Company VF, which provide evidence that Company VF uses accrual accounting.
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