accounting question?
accounting question?
q#13
Using accrual accounting, revenue is recorded and reported only
when cash is received without regard to when the services are rendered ?
when the services are rendered without regard to when cash is received ?
when cash is received at the time services are rendered ?
if cash is received after the services are rendered ?
Answers:
Chosen Answer
Ricardo R: None of the above, Accrual basis works as follow: Whether or not money has been receive, and whether or not the service has been rendered, it is when it is recorded in the books. For instant, a client call and you ask for 50% up front and it is December 28th and the service is schedule for Jan 5th of the following year, in a accrual basis you bill for 100% of the work regardless when it is performed. versus cash basis that gets recorded only when you actually receive the payment.
2006-10-29 05:57:40
Ricardo R: None of the above, Accrual basis works as follow: Whether or not money has been receive, and whether or not the service has been rendered, it is when it is recorded in the books. For instant, a client call and you ask for 50% up front and it is December 28th and the service is schedule for Jan 5th of the following year, in a accrual basis you bill for 100% of the work regardless when it is performed. versus cash basis that gets recorded only when you actually receive the payment.
2006-10-29 05:57:40
TaxGirl: ricardo's answer is correct, just add-on...if u incur expenses in december related 2 the income on the books, u deduct them in the same year its incurred, even if u dont pay it til the following year. using ricardo's example. u pay a vendor after Jan 5 for materials u needed 2 complete your clients job. u write off that expense the year u are billed even if u pay it in the following year. i usually recommend my clients use the cash method of accounting if theyre keeping their own books. record keeping can be a little easier except in long term contracts. try 2 receive payment b4 or when services are rendered.
2006-10-29 06:56:32
2006-10-29 06:56:32
rstlne999: when the services are rendered without regard to when cash is received
2006-10-29 22:32:05
2006-10-29 22:32:05