BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Accrual basis
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Cash basis
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Deferral basis
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Expense basis
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Detailed explanation-1: -Accrual accounting entries are journal entries that recognize revenues and expenses a company earned or incurred, respectively. Accruals are necessary adjustments that accountants make to their company’s financial statements before they issue them.
Detailed explanation-2: -Typically, an accountant will record adjustments for accrued revenues through debit and credit journal entries in defined accounting periods. This helps account for accrued revenues accurately and so that the balance sheet remains in balance.
Detailed explanation-3: -The key steps in the eight-step accounting cycle include recording journal entries, posting to the general ledger, calculating trial balances, making adjusting entries, and creating financial statements.
Detailed explanation-4: -An accrual-type adjusting entry is a journal entry recorded at the end of a reporting period that alters the amount of revenues or expenses recorded in the income statement.