At the time the transaction occurred, which of the following would result in an increase in net income under the accrual basis of accounting, but would not result in an increase in net income under cash basis accounting?

Question

Business

Kathryn Wang

1 April, 12:32

At the time the transaction occurred, which of the following would result in an increase in net income under the accrual basis of accounting, but would not result in an increase in net income under cash basis accounting?

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Answers (1)

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Lexi May · Answer 1

performance of services on account

Explanation:

As we know that according to the accrual basis of accounting, the transactions are recorded when the revenue is earned and the expenses are incurred. Moreover, it also meets the matching principle that refers that the expenses should be met with the revenues for the same period

So, by considering the service performed on account it causes an increase in net income under the accrual basis but it does not result in an increase in net income under cash accounting