Generally Accepted Accounting Principles and Accrual Basis

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Ch.2- Accrual Accounting and Income Determination

Under accrual basis
-Revenues are earned when the seller completes performance required by an agreement.

QA- Flying Carpet Tourism company purchased some cares for 24, making a down payment of 14 and signed a note payable for the remaining. How do you record this on cash basis once and on accrual basis another.

Answer: Accrual basis: Expenses 24
Cash basis: Expenses 14

QB- Company A made sales revenue of 150 thousands Dirhams, only 100 thousands were collected in cash. How much revenue would be recognized under cash basis once and under accrual basis another.

Answer: Accrual basis: Revenue 150
Cash basis: Revenue 100

QC- The company purchased computers for 54000 dirhams to be used for office work for 4 years and did not pay anything during the month of the purchase. For that month, How much expenses would be recognized under cash basis once and under accrual basis another.

Answer: Accrual basis: Expenses 54000
Cash basis: Expenses:nothing

Q2: (Table 2-1)
The IBM Corporation sells ten copiers to the Title Company on October 15 for $40,000. Canon delivers the copiers to Title on October 20; Title pays $16,000, and agrees to pay the balance on November 10.

|1. |Refer to Table 2-1. Under the cash basis, how much revenue is recognized in October? | | |a. $ 0 | | |b. $ 16,000 | | |c. $ 24,000 | | |d. $ 40,000 | |2. |Refer to Table 2-1. Under the accrual basis, how much revenue is recognized in...
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