Quiz 7: General Accounting and End-Of-Period Procedures: Merchandising Business

Business

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1) " Accounting matches income and expenses against a period, and. accounting records income when the money is received and expenses when the purchase is made or the bill is paid." Answer: Accrual basis and cash basis Justification: Accrual basis accounting: The expenses and revenue that have been incurred or earned in the current accounting period but not yet recorded are called accruals. The accrual basis of accounting is a method in which revenues are recognized on the income statement when they are earned. It is an accounting technique which is used to measure the performance and position of a company by recognizing economic events regardless of when cash transactions occur. Cash basis accounting: Cash basis is the accounting method, in which the revenue and expenditure are recorded only when it is paid or received. In cash basis accounting method, revenue and expenditure should not be recorded at the time when they are incurred. This is a major accounting process that recognizes expenses and revenues at the time physical cash is actually received or paid out. Difference between accrual accounting and cash accounting: The following are some of the differences between accrual basis accounting and cash basis accounting: img

"To print a reconciliation report that lists only totals, select." Answer: B. Summary Justification: In QuickBooks, the selected summaries are printable with the total of selected summaries only.