When Converting from Cash-Basis to Accrual-Basis Accounting, Which of the Following

question 94

Multiple Choice

When converting from cash-basis to accrual-basis accounting, which of the following adjustments should be made to cash receipts from customers to determine accrual-basis service revenue?

• A) Subtract ending accounts receivable.
• B) Subtract beginning unearned service revenue.
• C) Add ending accounts receivable.
• D) Add cash sales.

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Definitions:

Cost Of Production Report

A report prepared periodically by a processing department, summarizing (1) the units for which the department is accountable and the disposition of those units and (2) the costs incurred by the department and the allocation of those costs between completed and incomplete production.

Cost Of Goods Sold

The cost of finished goods available for sale minus the ending finished goods inventory.

Equivalent Units

A concept used in cost accounting to express the amount of work done by incomplete units in terms of fully completed units.

First-In, First-Out

An inventory valuation method that assumes the first items placed in inventory are the first sold.