Which of the following situations would result in an increase in income under the accrual method of accounting, but would NOT result in an increase in income under the cash- basis method of accounting?
A)Receipt of cash for services that were performed earlier on credit
B)Use of supplies purchased earlier
C)Purchase of supplies for cash
D)Performance of services on credit

Question

Quizplus · Accepted Answer

Under the accrual method, income is recognized when earned, so performing services on credit increases income. Under the cash basis, income is recognized when cash is received, so performing services on credit does not increase income until payment is received.

Which of the Following Situations Would Result in an Increase