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The accrual basis of accounting requires revenue be recorded when cash is received from customers?
Wiki User
∙ 12y ago
False. Under the accrual basis of accounting, revenue is recorded when earned, not necessarily when cash is received. Revenue is earned when a sale is made, whether the customer pays cash or makes the purchase on account.
Wiki User
∙ 12y ago
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What is the accounting principle that requires accounting information to be based on actual cost and require assets and services to be recorded initially at the cash or cash equivalent amount?
Cost principal
What do debits and credits look like at the end of a period in double-entry accounting?
At the end of the period, double-entry accounting requires that debits and credits recorded in the general ledger be equal.
Requires that accounting standards be followed for all significant items?
Requires that accounting standards be followed for all items of significant size
Specialized Accounting Fields?
Some specialized accounting fields include: tax accounting, corporate accounting and forensic accounting. Studying for these types of accounting position requires extra classes in college.
Which accounting principle requires that transaction should be recorded in the period they occurred?
There is no one accounting principle that requires that a transaction be recorded in the period it occurs (commonly referred to as accrual basis accounting). There is a conceptual statement that the Financial Accounting Standard Board has issued with regard to the use of accrual accounting. The Financial Accounting Standards Board has issued STATEMENT OF FINANCIAL ACCOUNTING CONCEPTS NO. 6: ELEMENTS OF FINANCIAL STATEMENTS which states in paragraph 134: Items that qualify under the definitions of elements of financial statements and that meet criteria for recognition and measurement are accounted for and included in financial statements by the use of accrual accounting procedures. The basis of accounting, whether cash basis or accrual, should be disclosed in the notes to the financial statements so that the financial statement reader is aware which method of accounting is in use. Generally accepted accounting principles (GAAP) does require the accrual basis of accounting; nevertheless, businesses can present their financial statements on a cash basis as long as proper disclosures are made. The financial statement opinion rendered by the external audit firm would also disclose that the cash basis of accounting is being used.
Does the full disclosure principle requires that the notes to the financial statements report a change in accounting method for inventory?
The full disclosure principle requires that the notes to the financial statements report a change in accounting method for inventory.
What are the effect of e-commerce on management accounting?
It requires more work. You will need to include these things into the accounting process in order to get accurate numbers.
The accounting principle that requires revenue to be reported when earned is the?
revenue recognition
What accounting principle requires revenue to be reported when earned?
In GAAP there are two basic accounting principles. The first being Accrual (which is the most commonly used) and the second being Cash Basis.Neither stipulate that income has to be "earned" before it is reported. The difference in the two are:Accrual basis accounting transactions are reported as they happen.1. For example, a contractor gets paid to remodel a home, he's received the money for the job, but hasn't earned it, completed the work. Accrual account states that this transaction be recorded as a liability (unearned revenue) to the company until the revenue is earned.2. Say the opposite is true in accrual accounting, the contractor finished the remodeling but isn't expected to be paid for it until later in the future. The company records this transaction as an asset (account receivable).Now let's look at Cash Basis: Cash basis states that a transaction didn't actually happen until such time the money is received, period. Take example 1, a transaction in cash basis accounting is recorded because money was actually received, even though it hasn't been earned.Example number 2 however, would be no recording of the transaction, although the job was finished, no money exchanged hands as of yet.This is why many businesses use accrual accounting. Only small companies that generally deal in cash or small amounts tend to lean toward cash basis accounting and it is still not recognized as a very good method of accounting by the GAAP.
The matching concept requires expenses be recorded in the same period that the related revenue is recorded?
true
What is integration cost accounting system and nonintegrated cost accounting system?
An integrated accounting system requires a cash book and general journal, where a set of books contains inventory and cost accounting information. In non-integrated cost accounting, only a purchase account is required to record purchases.
What kind of education do you need to do business accounting?
Business accounting is typically a job field that requires a degree in order to complete properly. You can major in accounting and have most of your bases covered, because there is a great deal of overlap between business and accounting courses at a typical university.
