A business that previously used the cash basis of accounting decides to adopt the accrual basis. It performed a service on 30 June for a client, but the cash payment was received on 10 July. Explain how the revenue from this service should be recorded under the accrual basis.

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Accepted Answer

Revenue should be recognised on 30 June as a debit to Accounts Receivable and a credit to Service Revenue; the cash receipt on 10 July merely clears the receivable.

Waec Model Questions Vol1 2019 Financial Accounting Question 33

A business that previously used the cash basis of accounting decides to adopt the accrual basis. It performed a service on 30 June for a client, but the cash payment was received on 10 July. Explain how the revenue from this service should be recorded under the accrual basis.

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Waec Model Questions Vol1 2019 Financial Accounting Question 33

A business that previously used the cash basis of accounting decides to adopt the accrual basis. It performed a service on 30 June for a client, but the cash payment was received on 10 July. Explain how the revenue from this service should be recorded under the accrual basis.

Answer Options

About This Question

Master the Exam!

A business that previously used the cash basis of accounting decides to adopt the accrual basis. It performed a service on 30 June for a client, but the cash payment was received on 10 July. Explain how the revenue from this service should be recorded under the accrual basis.