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Explain the consequences and all the adjustments involved

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Question - Upon checking, Ahmad discovered these additional data:

a) Fees for the advice given for the year ended 20 April 2020 for RM8000 were collected in the current year.

b) Fees earned in the current year of RM12,000 are expected to be collected in the following year.

c) Accrued salaries at 30 April 2020 and 2021 are Rm4000 and Rm4,300 respectively.

d) Paid yearly RM18,000 insurance premium in advance on 1 April 2021.

e) Ahmad Jukri withdrew RM2,400 to cover personal living expenses.

Required -

a) Ahmad is contemplating using the cash basis accounting as it is easier and less time consuming. As an accountant, you are advise Ahmad on the consequences of using cash basis accounting and accrual basis accounting. In your explanation to Ahmad you are apply to relevant accounting principles and assumptions to further explain the consequences and all the adjustments involved.

b) Further explain to Ahmad by distinguishing the effects of using case and accrual basis of accounting. Please show all workings.

Reference no: EM132939244

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