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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

Explain when revenues are recorded under the cash basis, modified cash basis, and accrual basis of accounting.

To determine

Explain the reason under which the revenues are recorded under the cash basis, modified cash basis, and accrual basis of accounting.

Explanation

Cash basis accounting:

Cash basis accounting is a method of accounting that records revenues only when they are received in cash and expenses only when they are paid as cash.

Modified cash basis accounting:

Modified cash basis accounting is a method of accounting that combine the both the aspects of cash basis and accrual basis. In this method the cash basis is used while recording revenues and most expenses. Exceptions are provided under this accounting when cash is paid for the asset that has a useful life more than one accounting year.

Accrual Cash basis accounting:

Accrual cash basis accounting is a method of accounting that records revenues when they are earned and records expenses when they are incurred...

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