A company pays $1,600 cash to employees for work performed during the month. Record the payment using (a) accrual-basis accounting and (b) cash-basis accounting. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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Business

Mcgee

30 July, 03:20

A company pays $1,600 cash to employees for work performed during the month. Record the payment using (a) accrual-basis accounting and (b) cash-basis accounting. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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Jeramiah Chapman · Answer 1

(a) Under Accrual basis of accounting

No journal entry is required

(b) Under Cash basis of accounting

Salaries/Wages expense A/C Dr. $1600

To Cash A/C $1600

(Being salaries, wages paid in cash)

The cash basis of accounting records transactions on receipts/payments basis and when cash is actually paid or received.

Accrual basis of accounting records transactions as and when they arise or incomes are "earned" irrespective of the fact whether actual payment has been made or received.