Cash Versus Accrual Accounting.

November 11th, 2008 Comments off
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Earlier articles describe both the accrual concept and profit versus cash concept.

Append below is a simple test to understand the cash versus accrual accounting.

Jim Co is a consulting company which have the following revenue and expenses for the month of October 2008

 

The company earned $10,000 but received only $8,000 in cash

Expenses were as follows

(i)  Rent $2,000 which was paid

(ii) Wages expense:$1,600 of which only 3 /4 was paid

(iii) Utilities expense:$700 was paid

(iv) Repairs expenses:$500 was unpaid

(v)  Stationery expenses:$200 was unpaid

(vi) Miscellaneous expenses:$100 was paid

 

 

 

Accrual Accounting

Cash Accounting

Revenue

 

 

 

 

 

Rent expense

 

 

Wages expense

 

 

Utilities expense

 

 

Repairs expense

 

 

Stationery expense

 

 

Miscellaneous expenses

 

 

Net Profit or (Loss)

 

 

Required:

Fill up the table based on cash and accrual accounting

[ Refer ANSWER ]

 

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Financial Accounting

 
 

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