F2 - Cash to Accrual

Question 1

How is prepaid expenses recognized in Cash Basis?

Answer 1

Recognize when cash is paid to vendor or supplier

Question 2

How is prepaid expense recognized in ACCRUAL Basis?

Answer 2

recognize when benefit is consumed by company

Question 3

Credit Sales of $5600
Collections of $1900 on credit sales
Accrued Salaries of @1200
Cash basis to Accrual. What would be the change?

Answer 3

• Credit Sales (income for accrual) +5600
• Cash collections is a deductions for accrual -1900
• Accrued Salaries is booked as an expense(accrual) -1200
• Total is $2500

Question 4

Convert cash receipts to revenues as reported on an accrual basis?

Answer 4

• Add ending AR
• Subtract beg. AR
• Subtract ending unearned rev/deferred revenue
• add beg. unearned or deferred revenue

Question 5

Converting Cash paid for purchases to COGS (accrual)?

Answer 5

• ADD Ending AP
• SUBTRACT Ending AP
• SUBTRACT Ending Inventory
• ADD Beg. Inventory