What are differences between cash and accrual accounting

Assignment Help Accounting Basics
Reference no: EM132279940

Learning outcomes to be achieved by completion of the assessment:

1. Record income and receipts from credit customer, purchases, expenditures and payments to supplier.
2. Differentiate between accrual and cash basis accounting.

CASE STUDY

Mr. Mohammed formed Bausher Enterprises on October 1, 2018. During the month, the following financial transactions occurred:

2018 October

 

1

Mohammed invested OR 200,000 in the new business.

6

Bausher Enterprise provided services to Xerox on account for OR 40,000

8

Acquired supplies from the producers for OR 120,000. ( Supplies are charged to expenses immediately ).

10

Services provided for cash OR 25,000

12

Paid Communication expense for OR 10,000

16

Purchased material on account for OR 20,000.

21

Paid to Al Khimji OR 2,000 cash for utility expenses.

23

Paid OR 8,000 cash for the material purchased on November 16

24

Received OR 30, 000 in cash from Xerox for services provided on November 6.

31

Withdrew OR 3,000 for personal use

Requirements: Now that you have reviewed the case study above, respond to the following requirements on your own.

Q1. Record each of the above transactions in a general journal. Explanations may be omitted. Use the following account titles to journalize the above transactions:
a. Cash
b. Accounts Payable
c. Accounts Receivable
d. Insurance Expense
e. Utility Expense
f. Capital
g. Service Fee income
h. Material
i. Withdrawals
j. Office Equipment

Q2. Prepare the end-of-month report to account for the incomes and expenses of Baushar Enterprises under Cash basis accounting.

Q3. Prepare the end-of-month report to account for the incomes and expenses of Baushar Enterprises under Accrual basis accounting.

Q4. What are the main differences between cash and accrual accounting? The student may identify and discuss giving example for both cash basis and accrual basis of accounting.

Instructions for completing the assignment:

1. The assignment must have a cover page indicating the module title, name of student, name of faculty and date of submission.

2. The assignment should have a table of contents, answers to the requirements and appropriate references, if necessary. Use Harvard style of referencing.

3. The assignment should be done in Word, font size 12, font style Times New Roman, text color black, colors can be used ONLY in appendices; main body of the report should be black and white.

Verified Expert

Accounting refers to the recording the transactions that have taken place during the year for the business. An adequate recording of these transactions is of an utmost importance since it helps in the business being functioning properly.

Reference no: EM132279940

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Reviews

len2279940

4/11/2019 12:10:43 AM

Excellent demonstration and layout of the various constituents of income, expenses, total 3. Preparation of end of month report to account for the incomes and expenses in accrual accounting expenses and net income. Outstanding demonstration 4. Differences between cash and accrual accounting. and explanation of the differences between cash and accrual accounting citing recent and appropriate references using Coventry Harvard Style of referencing. Outstanding examples depicting real life practical scenarios.

len2279940

4/11/2019 12:10:28 AM

1. Recording each of the above transactions in general journal. Outstanding demonstration and layout of entries. All entries comprising of the date, account titles and amount are correct in the journal. Excellent demonstration and layout of the 2. Preparation of various end of month constituents of report to account income, for the incomes expenses, total and expenses in expenses and net cash basis income. accounting.

len2279940

4/11/2019 12:10:05 AM

a. A student will be allowed to re-submit the assignment once, within a maximum period of one week. However, a penalty of Deduction of 25% of the marks obtained for the resubmitted work will be imposed. b. Mark deduction: When the work is resubmitted, the marking will be undertaken according to the marking criteria. In compliance with this policy, the 25% deduction is then made on the marks obtained. For example, in an assessment that carries a maximum of 50 marks, suppose a student were to obtain 30 marks for the resubmitted work, the final marks for that assessment will be 22.5 (after deducting 25% of the marks actually obtained for the resubmitted work). c. Period of resubmission: The student will have to resubmit the work one week from the date he or she is advised to resubmit. For example, if the formal advice to resubmit was communicated to the student on a Sunday (latest by 5 pm), the student will have to resubmit the work latest by next Sunday 5 pm.

len2279940

4/11/2019 12:09:52 AM

Maximum marks to be awarded for this assignment is 100. The evaluation criteria follows: Criteria Marks 1. Journal entries 50 2. Calculation of net income under cash basis 20 3. Calculation of net income under accrual basis 20 4. Differentiation between cash and accrual basis accounting 6 Formatting, referencing, cover page and table of contents 4 Total marks 100

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