Cash Basis vs. Accrual Basis Accounting
Differentiate between cash-basis accounting and accrual-basis
accounting. Why is accrual-basis accounting the preferred method
for most businesses? The Internal Revenue Service requires all
companies with sales over $5,000,000 to use the accrual-basis of
accounting for income tax reporting purposes. Why?
A. Differentiate between accrual accounting and cash basis.
Based on the type of business and the client’s accounting system,
what is the impact when revenue is recognized? Which option would
you recommend for the client?
B. Based on the decision of accrual vs. cash basis, describe
when revenue would be recognized on the sale of inventory, and how
the accrual reporting differs from cash basis.
C. Determine the economic impact on the client’s financial
situation. Based on your decision, determine...
Differentiate between cash basis accounting and
accrual basis accounting. Why do more businesses use accrual basis?
What are some of the accounting principles and concepts that
influence the four financial statements all business organization
create each financial period?
Question 4
Differentiate the following terminologies in Financial
Management
Corporate Governance and Corporate Social
Responsibility -
(2-marks)
Financial Market and Financial
Securities
-
(2-marks)
Term Structure and Cost of
Capital
-
(2-marks)
Spot Market and Futures
Market
-
(2-marks)
Stakeholders and
Shareholders
-
(2-marks)
Question 4
Explain the difference between financial accounting and
management accounting.
Ensure your
explanation clearly explains the purpose of management
accounting.
Car Services Ltd produces custom tow bars and bull bars for
utes and cars. Each customer’s order is treated as a separate job
so costs can be tracked for each customer.
Tasks
Briefly explain the following:
The meaning of the term cost object. Identify the cost object
that would be used by Car Services Ltd when recording costs.
The...
Differentiate between Accural V. Cash based accounting
1 Describe Accrual and Cash based accounting
2 Describe Revenues, expense and excess of revenues
over expenses
3 Describe Adjustments (6)
Regarding the differences between financial accounting and
management accounting, which of the following statements is
false?
Select one:
a. management accounting is less constrained than financial
accounting
b. the distinction between the two areas, to some extent,
reflects differences in access to financial information
c. there is no overlap between management accounting and
financial accounting
d. managers have much more control over the form and content of
their reports