Explain how cash and accrual accounting would differ

Assignment Help Accounting Basics
Reference no: EM131145719

1. KidVid, a maker of electronic games for kids, has just completed its first year of operations. The company's sales growth was explosive. To encourage large national stores to carry its products, KidVid offered 180-day financing-meaning its largest customers do not pay for nearly 6 months. Because KidVid is a new company, its components 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, KidVid 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.

Instructions

(a) Explain how cash and accrual accounting would differ for each of the events listed above and describe the proper accrual accounting.

(b) Assume that at the end of the year KidVid reported a favorable net income, yet the company's management is concerned because the company is very short of cash. Explain how KidVid could have positive net income and yet run out of cash.

Reference no: EM131145719

Questions Cloud

Can we utilisze more percentage of our brains : Write the  expository essay on the topic "Can we utilize more percentage of our brains than we do through Physics intervention?
How does this course relate to your everyday life : Identify and discuss the ways in which consumer and business goods and services can be classified. List and explain the purpose of each step of the new-product process. Describe the factors contributing to a new product's or service's success or f..
What is the steady-state level of capital per worker : What is the steady-state level of output per worker? Suppose that the economy is in steady state and that, in period t, the depreciation rate increases permanently from 0.10 to 0.20.
Develop and detail a pricing strategy you will use : Explain how the marketing plan targets the market segment. Provide a positioning statement for your project. Define the products and services you will offer.
Explain how cash and accrual accounting would differ : Explain how cash and accrual accounting would differ for each of the events listed above and describe the proper accrual accounting.
Read the scenario given below and answer the questions : What is the cause of this conflict?- What style did Sims initially use? If you were Sims, how would you approach Martinez in this situation?- Was it a good deal for Marcia? Why or why not?
How the countrys financial system is related to key variable : The organization's strategic plan calls for an aggressive growth plan, requiring investment in facilities and equipment. How the country's financial system is related to key macroeconomic variables?
What did you learn from your classmate posting : What did you learn from your classmate's posting? What additional questions do you have after reading the posting? What clarification do you need regarding the posting?
The company carefully kept track of all its cash receipts : Horeb Company, a ski tuning and repair shop, opened in November 2011. The company carefully kept track of all its cash receipts and cash payments.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Concerned about the insurance rates

Roberto Sanchez is thinking about purchasing a new car. However, he is concerned about the insurance rates. Before purchasing, he wants to find out the insurance rates on the cars he is evaluating. Select three different car manufacturers and mode..

  Cambria owns equipment that cost 93500 with accumulated

cambria owns equipment that cost 93500 with accumulated depreciation of 64000. cambria asks 35000 for the equipment but

  Vintech company is planning is planning to produce 1700

vintech company is planning is planning to produce 1700 units of product in 2011. each unit requires 5 pounds of

  In preparing its bank reconciliation for the month of april

in preparing its bank reconciliation for the month of april 2012 delano inc. has availale teh following infor balance

  Analyzing the results of operations

Preparing a budget and analyzing the results of operations in relation to the budget will help you understand how to use financial information to evaluate the effectiveness of an organization's operations. The process will also help you determine ..

  The company purchased 4000 yards of material in march for

the company purchased 4000 yards of material in march for 40000. the company used 3800 yards in march in order to make

  On january 12014 a company that prepares financial

on january 12014 a company that prepares financial statements paid rent for 2014 and 2015. the accountant recorded the

  Critical thinking rubric questions

Personal perspectives and position:  What is your experience and knowledge level regarding corporate/business taxes?  How did your personal tax experience and knowledge help you in completing this tax return?

  Cowley county hospital uses a job-costing system for all

cowley county hospital uses a job-costing system for all patients who have surgery. in march the pre-operating room

  Springtime paints makes quality paint in one production

springtime paints makes quality paint in one production department. production begins with the blending of various

  Kathleen battle corp it authorized to issue 10000 shares of

kathleen battle corp it authorized to issue 10000 shares of 8 100 par value preferred stock. and 500000 shares of no

  Allowances method of accounting for uncollectible receivable

Journalize the following transactions using the allowances method of accounting for uncollectible receivables.

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