choice between using the cash basis of accounting and the accrual basis of accounting, which of the two methods do you believe they would choose

Sep 5th, 2017
Anonymous
Category:
Accounting
Price: $15 USD

Question description

  • 1. Business owners are given a choice between using the cash basis of accounting and the accrual basis of accounting, which of the two methods do you believe they would choose? Based on your selected method, will the financial statements presented show a true representation of the company's performance? Why or why not?



  • 2. A company fails to recognize revenue for services performed but not yet received. Which of the following types of accounts are involved: (a) asset, (b) liability, (c) revenue, or (d) expense? For the accounts selected, indicate whether it would be debited or credited in the entry.



  • 3. In what order should the financial statements be prepared in? or does the order not matter?



  • 4. The accountant for Newman Production services failed to record an adjusting entry of $5,000 for unpaid taxes. How will this impact the current year financial statements? Be sure to state the type of account (Asset, Liability, Owner's Equity, Revenue or Expense) and whether it will be understated or overstated

Tutor Answer

(Top Tutor) Tutor_Booth
School: Carnegie Mellon University
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The business owners would choose the accrual basis of accounting. This is because it
gives a clearer picture of their firms’ profits during a period of accounting. Under this method,
the income statement would report all the company revenues actually earned as...

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