25-26 Cash VS Accrual
Presentation
•
Business
•
9th - 12th Grade
•
Practice Problem
•
Easy
Bobbie Jones
Used 2+ times
FREE Resource
7 Slides • 18 Questions
1
2
3
Multiple Choice
According to the matching principal, when should a business record transactions in its books and records?
When cash is received
When the event occurs, not when cash is exchanged
At the end of the fiscal year
Only after bank reconciliation
4
5
Multiple Select
Select all statements that are true about cash accounting. (Choose 3)
It records transactions when cash is received or used.
It is not concerned if the activities associated with those transactions have taken place.
It is a Generally Accepted Accounting Principal (GAAP) method.
It is generally used by individuals and some very small businesses.
6
Multiple Choice
Cash accounting is generally used by:
Public corporations
Large companies
Individuals and very small businesses
Banks only
7
Multiple Choice
Which accounting method records transactions only when cash is received or paid?
Accrual Accounting
Cash Accounting
Matching Accounting
Deferred Accounting
8
Multiple Choice
Under cash accounting, revenue is recorded when:
It is earned
Cash is received
A contract is signed
An invoice is issued
9
10
Multiple Choice
Which of the following statements best describes the main difference between cash accounting and accrual accounting?
Cash accounting records transactions when cash is received or used, while accrual accounting records transactions when revenues are earned and expenses are incurred.
Cash accounting is a Generally Accepted Accounting Principal (GAAP) method, while accrual accounting is not.
Cash accounting is used by almost all businesses, while accrual accounting is used by individuals and small businesses.
Cash accounting records transactions only when activities have taken place, while accrual accounting records transactions only when cash is received.
11
Multiple Choice
Which accounting method is considered GAAP compliant?
Cash Accounting
Accrual Accounting
Hybrid Accounting
None of these.
12
Multiple Choice
Under accrual accounting, expenses are recorded when:
Cash is paid
A bill is created
The resource is used (incurred)
The month ends
13
Multiple Choice
Accrual accounting is primarily used by:
Individuals
Small hobby businesses
Almost all businesses
Only government organizations
14
15
Multiple Choice
The phrase “IE = Income Earned” means:
Record income when cash arrives
Record income when the activity has been performed
Record income at year-end only
Ignore income until audited
16
Multiple Choice
“EI = Expenses Incurred” means:
Record expenses when paid
Record expenses when supplies are purchased
Record expenses when the resource has been used
Never record expenses
17
Multiple Choice
Which accounting cycle step is a good example of EI?
Preparing a Trial Balance and totaling debits and credits to avoid transpose errors
Posting to the General Ledger in order to track account balances
Analyzing the Transaction using the T accounts
Adjusting Supplies and Prepaid Insurance on the trial balance worksheet
18
Multiple Choice
Which of the following events shows “earned” revenue?
Receiving cash before doing work
Performing the service or delivering goods
Signing a contract
Depositing a check
19
20
Multiple Choice
If a company earns revenue in March but receives cash in May, under accrual accounting revenue is recorded in:
March
May
January
It is not recorded
21
Multiple Choice
Which method ignores whether work has been performed?
Accrual
Cash
Matching-based
Reconciliation
22
Multiple Choice
On March 5th, 2024, Valley View Landscaping completed yard work for a customer.
The customer didn’t have cash available that day, so they paid $350 in cash on April 1st, 2024.
Under Cash Basis Accounting, how much revenue should Valley View Landscaping record on March 5th?
$0
$176
$350
Depends on the type of customer
23
Multiple Choice
On March 5th, 2024, Valley View Landscaping completed yard work for a customer.
The customer didn’t have cash available that day, so they paid $350 in cash on April 1st, 2024.
Under Accrual Basis Accounting, how much revenue should Valley View Landscaping record on March 5th?
$0
$176
$350
Depends on the type of customer
24
Match
Match the following (Note Inc=Income and Exp= Expense)
Earned Revenue
Cash Accounting
Accrual Accounting
Incurred Expense
GAAP
Income recorded when service performed
Method recording when cash moves
Method records when Inc or Exp incurred
Outlay recorded when resource is used
Guidelines for matching Inc with Exp
Income recorded when service performed
Method recording when cash moves
Method records when Inc or Exp incurred
Outlay recorded when resource is used
Guidelines for matching Inc with Exp
25
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