Which of the following would result in an increase in income under the accrual method of accounting,but would not result in an increase in income under cash basis accounting?
A)purchase of supplies for cash
B)performance of services on account
C)use of supplies purchased earlier
D)receipt of cash for services that were performed earlier on account

Question

Quizplus · Accepted Answer

Under the accrual method of accounting, income is recognized when it is earned or when services are performed, regardless of whether cash has been received or not. Therefore, performing services on account would result in an increase in income under the accrual method but not under the cash basis accounting. Purchasing supplies for cash (A), using supplies purchased earlier (C), and receiving cash for services performed earlier on account (D) would all result in a cash transaction, which is recognized under the cash basis accounting method.

Which of the Following Would Result in an Increase in Income