Team Shirts ordered T-shirts from its supplier in June.The T-shirts were delivered in July.Team Shirts paid the bill in August and sold the T-shirts in September.When should Team Shirts recognize an expense using cash-basis accounting?
A)June
B)September
C)August
D)July

Question

Quizplus · Accepted Answer

Under cash-basis accounting, expenses are recognized when the cash is actually paid, regardless of when the goods or services were delivered. In this scenario, Team Shirts paid the bill in August, so the expense should be recognized in August.

Team Shirts Ordered T-Shirts from Its Supplier in June