(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 describe: The difference between the accrual basis accounting and cash basis accounting.
(b)
To comment: The preference of cash basis of accounting over an accrual basis of accounting by the politician.
(c)
To Explain: The government that it should practice the accrual basis of accounting.
Want to see the full answer?
Check out a sample textbook solutionChapter 4 Solutions
FIN. ACCT.-TOOLS FOR BUS.DEC.MAKING-CODE
- Q9) Monetary policy is ✅a)the management of the money supply and interest rates. b) involves decisions about government spending and taxation. c)the excess of expenditures over revenues for a particular year d) is the excess of revenues over expenditures for a particular yeararrow_forwardChoose the best answer from the four choices Assuming that a government will collect its sales taxes in sufficient time to satisfy the “available” criterion, it would ordinarily recognize revenue from sales taxes in its governmental fund statements When the underlying sales transaction takes place On the date the merchant must remit the taxes to the government On the date the merchant must file a tax return When the taxes are received by the government Assuming that a government will collect its sales taxes in sufficient time to satisfy the “available” criterion, it would ordinarily recognize revenue from sales taxes in its government‐wide statements When the underlying sales transaction takes place On the date the merchant must remit the taxes to the government On the date the merchant must file a tax return When the taxes are received by the governmentarrow_forwardWhich statement is not correct? A. The primary function of the financial system is to facilitate well the flow of funds in the economy, from those who have surplus funds but can’t utilize them to those who have deficiency of funds but have productive use for the funds. B. The president and the congress sets fiscal policies that are geared towards counteracting excessive spending and borrowing during economic boom and encouraging spending during economic depression. C. Financial Institutions like banks, insurance companies and mutual funds, are entities that receive funds from savers and invest the funds in securities issued by borrowers. D. The Philippines Stock Exchange is the primary capital market of the Philippines where the debt and equity securities of publicly listed corporations are traded. E. none of the abovearrow_forward
- A government entity makes payment through Advice to Debit Account (ADA). The entry is most likely to be used in recording the payment is a. Accounts Payable Advances to Officers and Employees b. Accounts Payable Subsidy from National Government c. Accounts Payable Cash- ADA d. Nonearrow_forward28. A government entity pays an accounts payable. The entry to record the payment will most likely include a Debit to “Cash-Modified Disbursement System (MDS), Regular Account. Credit to “Due to BIR” account Credit to the “Cash-Treasury/Agency Deposit, Regular’ account None of these. The event is recorded only in the registries and the obligation request and status.arrow_forwardBalance of payment data is used by various stakeholders, including society. What is your opinion regarding the need of preparing balance of payment? Critically analyze your statement. Do you agree that balance of payment is just one sided story of a transaction and it gives only cash position of a country by the year end? The BOP surplus or deficit positions have specific meanings. Critically analyze the BOP positions with proper justification.arrow_forward
- Which group in the federal goverment is responsible for counting M1 and M2 money amounts? A. Internal Revenue Service B. Department of the Treasury C. Federal Reserve D. US Mint Which problem associated with barter transactions is reduced when people conduct these transactions with money? A. Deflation B. Local sales taxes C. Inflation D. Transaction costsarrow_forwardIdentify which among the cases describe a net supplier of funds. [C1] The government has collected the taxes for the period and has kept the cash in profit-generating short-term investments. [C2] Individuals who purchased stocks and bonds using cash from their salaries. Only C1 Only C2 Both C1 and C2 Neither C1 nor C2arrow_forwardExplain challenging face by the malaysian government in order the transitions from cash accouting to accrual accounting to be successful during covid-19 pandemic ..with explaination and examplesarrow_forward
- Which of the following is a promise by the Government to pay a stated sum after expiry of the stated period from the date of issue? a. Commercial Papers b. Bankers’ Acceptance c. Treasury Bills d. Bills of Exchangearrow_forwardTrue or False 1. The volume of our money is being regulated by the government and subject to the approval of the president.arrow_forwardQ1) 4) How governments utilize the special revenue fund?5) Mention two differences between the receipt and payment account and the cash book?arrow_forward