Which of the Following Entries Would Be Recorded If a Company

question 43

Multiple Choice

Which of the following entries would be recorded if a company is using the cash-basis method of accounting?

• A) \[\begin{array} { | l | r | r | }
• \hline \text { Cash } & 1000 & \\
• \hline \text { Accounts receivable } & & 1000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | r | r | }
• \hline \text { Salary expense } & 1000 & \\
• \hline \text { Salary payable } & & 1000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | r | r | }
• \hline \text { Rent expense } & 1000 & \\
• \hline \text { Cash } & & 1000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | r | r | }
• \hline \text { Prepaid rent } & 1000 & \\
• \hline \text { Cash } & & 1000 \\
• \hline
• \end{array}\]

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Definitions:

Forecasted Net Income

An estimate of a company's profit for a future period, calculated by projecting revenues and subtracting anticipated expenses.

Competitive Pricing

A pricing strategy where a product's price is set based on the prices of similar products offered by competing businesses in the market.

Industry Averages

Statistical metrics that represent the average performance or output within a particular industry.

Accounts Receivable

Debts that customers owe a business for delivered goods or services awaiting payment.