Dan Is the Owner of VHS Video's Inc

question 130

Multiple Choice

Dan is the owner of VHS Video's Inc.VHS rents videos for overnight use and also sells videos from stock.In accounting for VHS transactions,Dan
I.May use either the cash or the accrual method.
II.Must use the cash method to account for video rentals.
III.Must use the accrual method for video sales and purchases.
IV.May elect to use the accrual method for all sales and rental revenues and the cash method for purchases of videos and all other business expenses.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Only statement III is correct.
• D)Only statements II and III are correct.
• E)Only statement IV is correct.

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Definitions:

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