Wk 2 – Accounting Methods
University of Phoenix Week 2 Homework revisited
Accounting Methods
Instructions: For event, indicate the accounting treatment under both Cash Accounting and Accrual Accounting. If no accounting entry is required enter “NA.” What accounts? What TYPE are the accounts? Are the accounts increasing or decreasing?
|
Business Policy |
Event |
Cash Accounting |
Accrual Accounting GAAP |
|
180-day financing for customers
|
Goods or services delivered to customer |
|
|
|
|
Customer pays cash after 180 days
|
|
|
|
Payment to equipment suppliers upon delivery of goods |
Received equipment |
|
|
|
|
Adjusting entry each accounting period
|
|
|
|
Prepayment for 2 years of insurance coverage
|
Paid cash for insurance coverage |
|
|
|
|
Adjusting entry each accounting period
|
|
|
|
Salary and Wages paid monthly |
One month’s salaries owed at year-end |
|
|
|
|
Payroll checks delivered at beginning of next year |
|
|