Ask Question
24 March, 14:21

How are revenues and expenses reported on the income statement under (a) the cash basis of accounting and (b) the accrual basis of accounting

+3
Answers (1)
  1. 24 March, 18:13
    0
    (a) Under Cash Basis of accounting

    Revenues and expenses are recorded either when payment is made or payment is received. It relates to accounting receipts and payments. The drawback of this approach being, it ignores accounting period as it places relevance on actual receipts and payments.

    (b) Under Accrual Basis of Accounting

    Under accrual basis, a transaction is recorded when income is earned and when expenditure is incurred and not when actual cash for the same has been received and paid for.

    Accrual system of accounting is more prudent form of accounting and ensures transactions relating to a period are recorded and accounted for in that particular period.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “How are revenues and expenses reported on the income statement under (a) the cash basis of accounting and (b) the accrual basis of ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers