Under Cash-Basis Accounting,an Expense Is Recorded ONLY When Cash Is

question 108

True/False

Under cash-basis accounting,an expense is recorded ONLY when cash is paid out.

Understand the impact of adjustments on financial statements.

Comprehend the process and effects of recording prepaid expenses and accruals.

Identify the components and calculation of cost of goods sold.

Learn the classification of different accounts and their presentation on financial statements.

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Definitions:

Income Statement Credit Column

The section of the income statement where credit entries, typically revenues and gains, are recorded.

Balance Sheet Credit Column

The section of the balance sheet where liabilities and equity accounts are listed, typically reflecting sources of the company’s funds.

Worksheet

A document or tool used for planning, organizing information, solving problems, and making calculations.

Income Summary

An account used in closing entries to collect the revenue and expenses for a specific accounting period before transferring the net result to capital.