How cash and accrual accounting differs

Assignment Help Accounting Basics
Reference no: EM132530564

Question - BizCon, a consulting firm, has just completed its first year of operations. The company's sales growth was explosive. To encourage clients to hire its services, BizCon offered 180-day financing - meaning its largest customers do not pay for nearly 6 months. Because BizCon is a new company, its equipment suppliers insist on being paid cash on delivery. Also, it had to pay up front for 2 years of insurance. At the end of the year, BizCon owed employees for one full month of salaries, but due to a cash shortfall, it promised to pay them the first week of next year.

Explain how cash and accrual accounting differs for each of the events listed in the above scenario and describe the proper accrual accounting.

Assess how at the end of the year, BizCon reported a favorable net income, yet the company's management is concerned because the company is very short of cash. Explain to management how BizCon could have positive net income and yet run out of cash.

Reference no: EM132530564

Questions Cloud

What is post modern contemporary philosophy : What is Post modern contemporary philosophy
How many gangs are there in the united states : Review the FBI National Gang Report. Then visit the FBI's Youtube channel and the FBI's "What we Investigate: Gangs". Use the information shared on the FBI.
Discuss claim with reference to two areas of knowledge : "The questions we can ask depend more on what we already know than on what we do not know." Discuss this claim with reference to two areas of knowledge.
Reciprocal coercion of competing interests : Imm liberty anuel Kant argued that British sentimentalists (such as the economist Adam Smith and Smith's close friend historian and philosopher David Hume)
How cash and accrual accounting differs : Explain how cash and accrual accounting differs for each of the events listed in the above scenario and describe the proper accrual accounting
What is the impact of oil industry : Why government needs to reduce its dependence on oil industry? What steps are taken by Oman's government to reduce its dependency on Oil Industry
Explain what is meant by sustainability reporting : Explain what is meant by sustainability reporting and why a publicly listed insurance company like WealthWise may adopt this approach.
List 3 possible explanations for the correlations : List 3 possible explanations for the correlations presented in the question. Then, of those three choose the one you think is the most likely
Find the amount to be expensed by bankstown limited : Final adjustments to the extrusion plant $25 000. Find the amount to be expensed by Bankstown Limited at the end of the financial year, 31 December

Reviews

Write a Review

Accounting Basics Questions & Answers

  What is the adjusting entry required

What is the adjusting entry required if Sandhill Co. prepares financial statements on March 30

  What information does the cash flow statement provide

What information does the cash flow statement provide that you cannot see in the other financial statements (income statement, balance sheet, owner's equity)?

  Discuss tempe corporation''s capital structure consists

Tempe Corporation's capital structure consists of 50,000 shares of common stock. The December 31, 2016 account balances are listed below

  Prepare the journal entry to record replenishment of fund

Accounting for Petty Cash Transactions On September 30, Hector's petty cash fund of $100 is replenished. At the time, the cash box contained $18 cash.

  Journalize the adjusting entry required at the end of year

Journalize the adjusting entry required at the end of the year for each of the following situations: amount of unexpired insurance applicable to future period

  Discuss the pros and cons of recycling the audit program

Discuss the pros and cons of recycling. Once the audit program is developed in one year, can that same audit program be used in the year for that same client?

  Preparation of a consolidated balance sheet

Present, in general journal form, the elimination entries for the preparation of a consolidated balance sheet workpaper on January 1, 2011

  Output totaled 40000 units each unit requires three machine

compute the activity cost rates for materials handling assembly and design based on these datamaterialscloth

  Accounting procedures are in the form of ritual

Assume that accounting procedures are in the form of ritual. Does this imply that the accountant's product does not serve a useful function? Discuss.

  Sheahan company recently acquired three businesses

1.sheahan company recently acquired three businesses recognizing goodwill in each acquisition. acquired goodwill was

  What is the total adjusted cost base of the common shares

When incorporated Z Ltd. issued 1,000 common shares to A for 1,000. What is the total adjusted cost base (ACB) of the common shares owned by A

  Create the cash flows from operating activities section

Ames Company reported 2014 net income of $153,450. During 2014. Create the cash flows from operating activities section of the statement of cash flows.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd