A Company Received a $6,500 Deposit from a Customer for Goods

question 24

Short Answer

A company received a $6,500 deposit from a customer for goods to be delivered the following month.Under the accrual and cash basis of accounting respectively the deposit would be recorded as:
$$\begin{array} { | l | l | l | } \hline & \begin{array} { l } \text { Accrual } \\\text { bassis }\end{array} & \begin{array} { l } \text { Cash } \\\text { basis }\end{array} \\\hline \text { a. } & \text { a liability. } & \text { a liability. } \\\hline \text { b. } & \text { a liability. } & \text { income. } \\\hline \text { c. } & \text { income. } & \text { a liability } \\\hline \text { d. } & \text { income. } & \text { income. } \\\hline\end{array}$$

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Definitions:

Operating Segments

Components of a business from which separate financial information is available and is evaluated regularly by the company’s decision makers.

US GAAP

United States Generally Accepted Accounting Principles, a common set of accounting principles, standards, and procedures that companies and their accountants must follow when they compile their financial statements.

ASPE

Accounting Standards for Private Enterprises; a set of accounting standards for privately held companies in Canada.

IFRS

IFRS, or International Financial Reporting Standards, are a set of accounting standards developed by the IASB that aim to ensure transparency, accountability, and efficiency in the financial statements of public companies globally.