A Small Company May Be Able to Justify Using a Cash

question 201

Multiple Choice

A small company may be able to justify using a cash basis of accounting if they have

• A) sales under $1000000.
• B) no accountants on staff.
• C) few receivables and payables.
• D) all sales and purchases on account.

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Definitions:

Union Dues

Fees paid by workers to a union for membership and representation.

State Sales Tax

A tax imposed by a state on sales of goods and services, collected by the seller and passed on to the state government.

Sales Taxes Payable

A liability account that represents the amount of sales tax collected from customers by a business, which is owed to the government.

Adjusting Entry

A journal entry made in the accounting records at the end of an accounting period to allocate income and expenses to the correct periods.