Accountıng I Deneme Sınavı Sorusu #1313679
What is the cash accounting?
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Companies record revenues when they receive the cash and they record expenses when the cash is paid |
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Companies record revenues when they perform services (rather than when they receive cash) and record expenses when they are incurred (rather than when paid). |
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Revenue is recorded when earned and expenses are recorded when consumed. |
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A company should record an expense for estimated bad debts that have not yet been incurred. |
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The account basis of accounting is the concept of recording revenues when earned and expenses as incurred. |
In cash basis accounting, companies record revenues when they receive the cash and they record expenses when the cash is paid. Cash basis accounting records only cash transactions—cash receipts and cash payments. Basically, it is a simple method. But it prevents businesses from being cautious. Companies adopting cash basis accounting focus only transactions involving cash. Those with no monetary input are not taken into consideration. It is possible to say that cash basis accounting is mostly used by small businesses.
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