AMR Received $1,600 on a Sale Using the Cash Basis

question 64

Multiple Choice

AMR received $1,600 on a sale using the cash basis of accounting and did not record a sale on account. This transaction should have been recorded under accrual accounting. The balance sheet problem, using the cash basis of accounting, is the failure to record an entry to which account?

• A)Cash
• B)Accounts Receivable
• C)Sales
• D)Both Accounts Receivable and Sales

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Definitions:

Process Inventory

Materials and goods that are currently in various stages of production within a manufacturing system, not yet completed as final products.

Cost Reconciliation Report

A financial report that explains the differences or reconciles the variances between the expected costs and the actual costs incurred.

Weighted-Average Method

A cost accounting technique used to allocate costs to inventory and cost of goods sold, averaging the costs of goods available for sale and assigning them to the units sold and remaining inventory.

Work in Process Inventory

The total cost of unfinished goods currently in production, including material, labor, and overhead.