What are the items in cash-basis financial statements that make cash-basis accounting...
Question:
What are the items in cash-basis financial statements that make cash-basis accounting inconsistent with the theory underlying the elements of financial statements?
Cash Based Accounting:
The cash basis accounting promotes the recording of business transactions based cash and not on account. Revenue, Expense, Assets, Liabilities and equity are recorded in terms of cash only under their respective heads.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answerIf a company adapts cash basis accounting policy it do not records any of invoices, payment or expenses which outstanding.
Therefore it does not...
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
Recording Business Transactions in Accounting
from
Chapter 3 / Lesson 7
91K
Learn about recording transactions. Understand what recording transactions is, examine the process of recording transactions, and identify its importance.
Related to this Question
- What information do accrual-basis financial statements provide that cash basis statements do not?
- What information do cash basis financial statements provide that accrual basis statements do not?
- Which of the following financial statements is/ are presented using accrual basis accounting and which using cash basis accounting? 1) Income statement 2) Balance sheet 3) Statement of cash flows
- Which of the following statements is true? |The basic principle of the statement of cash flows is to convert all financial statement amounts from a cash basis to an accrual basis of accounting |The
- What basis of accounting does GAAP require on the income statement, balance sheet, and statement of cash flows?
- What are the four basic financial statements? Describe the statement of cash flows, and explain why it is important.
- Which of the following is not one of the four basic financial statements? (a) Balance sheet (b) Statement of cash flows (c) Retained earnings statement (d) Income statement.
- Which financial statement does Cash appear on? A. Income Statement B. Statement of Retained Earnings C. Balance Sheet
- Which financial statement reports revenues and expenses? Which statement reports cash receipts and cash payments?
- On which financial statement(s) does the cash account appear?
- On which financial statement will you find Accounts Receivable? 1. None. 2. Balance Sheet. 3. Income Statement. 4. Statement of Cash Flows.
- Which of the following is true regarding the statement of cash flows? a. It must be prepared prior to the income statement. b. It is the one statement that relies on accrual accounting. c. This statement is based on the principles of double-entry bookkeep
- Which of the following basic elements of financial statements is more associated with the balance sheet than the income statement? A) Equity. B) Revenue. C) Gains. D) Expenses.
- What is the difference between cash-basis and accrual basis of accounting? Provide one example.
- Which standard financial statement would you use if you want to know details of cash inflows and outflows? a. Cash flow statement b. Break-even analysis c. Balance sheet d. Income statement
- What are financial statements? Also, discuss the income statement and balance sheet and the statement.
- What financial statement would be most interesting to a creditor? a. retained earnings statement b. balance sheet c. income statement d. cash flow
- Explain the basic formats of financial statements, such as the income statement, balance sheet, statement of cash flows, and statement of retained earnings.
- On which financial statement will you find financing cash flow? 1. None. 2. Income Statement. 3. Statement of Cash Flows. 4. Balance Sheet.
- What information does the cash flow statement provide that cannot be found on other financial statements?
- Which method of accounting (cash or accrual basis) is consistent with Generally Accepted Accounting Principles? Why?
- On which financial statement will you find Sales or Revenue? 1. Statement of Cash Flows. 2. Balance Sheet. 3. Income Statement. 4. None of the above.
- Which financial statements are prepared on the accrual basis of accounting?
- Discuss the differences between accrual-basis financial statements and cash-basis financial statements.
- Which financial statement represents the accounting equation, Assets = Liabilities + Owner's equity. a. Income Statement. b. Statement of Cash flows. c. Balance Sheet. d. None of the above.
- Which one of these statements about the accrual basis of accounting is false? (a) Companies record events that change their financial statements in the period in which events occur, even if cash was not exchanged. (b) Companies recognize revenue in the p
- Identify which statement the following item would appear: Accounts receivable, ending balance. a. Income Statement b. Balance Sheet c. Statement of Cash Flows
- What is the usefulness of the statement of cash flow? Do the balance sheet and the income statement provide sufficient cash flow information?
- What s the difference between cash basis and accrual basis accounting?
- Describe how the financial statements (the income statement, statement of retained earnings, balance sheet and statement of cash flows) are interrelated. Provide at least two examples. If you were an investor, would you place more emphasis on any one part
- What financial statement would be most interesting to a manager? a. retained earnings statement b. balance sheet c. income statement d. cash flow
- What are the four basic assumptions that underlie the financial accounting structure? Explain.
- Why do accrual-basis financial statements provide more useful information than cash-basis statements?
- On which financial statement(s) does the Merchandise Inventory account appear?
- What criteria should accountants consider in determine whether a transaction or an event in material? Does the concept of materiality mean that financial statements are not precise, down to the last dollar? Does this concept make financial statements less
- Which of the financial statements are required by the GAAP? A. Statement of changes in stockholders' equity. B. Balance sheet. C. Statement of cash flows. D. Income statement. E. All of the above.
- Name five financial reporting implication differences resulting from the use of the cash method versus the accrual basis of accounting.
- What are a balance sheet, an income statement, and cash flow?
- What is the purpose of a statement of cash flows? How does it differ from a balance sheet and an income statement?
- What components within the accounting equation would cash fall under?
- What is important to include in a financial statement analysis in terms of the income statement when assessing the financial statements?
- Which of the following is NOT associated with accrual basis accounting? a. Income statement. b. Matching principle. c. Statement of cash flows. d. Revenue recognition principle.
- On which financial statement(s) does the Wages Expense account appear?
- The statement of cash flows adjusts net income to what basis?
- What are the differences between the income statement and the statement of cash flows?
- Identify which statement the following item would appear: Sales. a. Income Statement b. Balance Sheet c. Statement of Cash Flows
- Identify which statement the following item would appear: Cash paid for wages during the period. a. Income Statement b. Balance Sheet c. Statement of Cash Flows
- Describe the difference between cash-basis and accrual-basis accounting, and explain which method is consistent with GAAP.
- Why is an accrual-basis financial statements provide more useful information than cash-basis statements? Provide an example of a revenue or expense transaction under each methodology.
- On which financial statement will you find Interest Expenses? 1. Statement of Cash Flows. 2. None. 3. Balance Sheet. 4. Income Statement.
- What type of accounting disclosure is required if the consistency concept is not applied to financial statements?
- What are the three statements of cash flows? What or how do we differentiate these?
- Which of the following is not considered a pro forma financial statement? a. Sales budget b. Balance sheet c. Cash flow statement d. Income statement
- Identify which statement the following item would appear: Cash received from borrowing money during the period. a. Income Statement b. Balance Sheet c. Statement of Cash Flows
- What is the theory behind the matching principle? In what method of accounting, accrual or cash, does the matching principle apply?
- In what method of accounting, accrual or cash, does the matching principle apply?
- What is true about statements of cash flows prepared according to U.S. GAAP?
- Tell which concepts of accrual accounting most directly relates to the assumption or action: (a) periodicity, (b) continuity, (c) matching rule, (d) revenue recognition, (e) deferral, and (f) accrual: Recognizes the usefulness of financial statements prep
- Which basic element of financial statements arises from peripheral or incidental transactions? a. assets b. liabilities c. gains d. expenses
- What is the difference between accrual-basis accounting and cash-basis accounting?
- What is cash? How do you determine the amount of cash to be reported on a balance sheet? What items should be included as cash?
- On which financial statement(s) does the Cost of Goods Sold account appear?
- Which financial statement is similar to the accounting equation? a. the income statement b. the balance sheet c. the statement of changes in shareholders' equity d. the statement of cash flows
- Which of the following statements about the financial statements is correct? a) The "change in cash" reported on the statement of cash flows is also reported on the statement of retained earnings. b) The statement of cash flows is for a period of time whi
- What is the difference between cash basis and accrual basis?
- Which financial statement would you utilize to determine whether a company will be able to pay liabilities which are due in 30 days? a) Income statement b) Balance sheet c) Statement of retained earnings d) Statement of cash flows
- Which of the following statements is TRUE regarding a statement of cash flows? A. A statement of cash flows measures the profitability of a company using the cash basis of accounting. B. Two different methods may be used to compute the net cash flows from
- How are revenues and expenses reported on the income statement under (a) the cash basis of accounting and (b) the accrual basis of accounting?
- What important information is provided by the statement of cash flows that makes it special and different from the income statement?
- Which of the following is true of the statement of cash flows? a. It is not required to be presented under U.S. GAAP. b. It connects the income statements and balance sheets. c. It is considered to be the least important financial statement by the inve
- Which accounting assumption requires that only those things that can be expressed in dollar values are included in the accounting records? a. monetary unit assumption. b. historical cost principle. c. periodicity assumption. d. full disclosure principle.
- Explain how the following financial events would be reflected in the financial statements and notes to the financial statements. Consider the impact on the balance sheet, income statement and statement of cash flows. (Assume the events are fictional and t
- What is the Accounting Equation, and what do each of the elements represent? Discuss why the Accounting Equation is the foundation of accounting. Discuss what components of the accounting equation are
- What causes accrual basis income to be less than cash basis income?
- Why is a Statement of Cash Flows important? What information does it provide above and beyond what is in the other statements (balance sheet, income statement, and statement of changes in stockholders' equity)?
- What are the differences, including timing issues, between cash basis accounting and accrual basis accounting?
- What is the difference between the cash basis and accrual basis of accounting? Which does GAAP accounting require, and why?
- What are the differences between the cash and accrual methods of accounting?
- On which financial statement(s) would the Salaries Expense account appear?
- What financial statement is a report of cash receipts and cash payments during a period?
- What are the purposes of the income statement, balance sheet, and the statement of cash flows?
- What are the three types of activities that are reported in the Statement of Cash Flows? Give examples.
- Identify which statement the following item would appear: Wage expense for the period. a. Income Statement b. Balance Sheet c. Statement of Cash Flows
- Identify the financial statement on which each of the following items appears by making an X in the appropriate column. The first one is done for you. tabletheadtrthItem/ththIncome Statement/ththBalance Sheet/ththStatement of Cash Flows/th/tr/theadtbodytr
- Explain what information the statement of cash flows offers that the income statement and balance sheet do not provide, and how this information provides greater insight into business health and stability. Include in your discussion the three main section
- Which financial statement would contain the following account balance: Sales revenue? a. Balance Sheet b. Income Statement c. Statement of Owners' Equity
- Which of the following items would be reported on a statement of cash flows using the indirect method, but not on a statement prepared using the direct method? A) Cash paid for dividends B) Cash received from stock issuances C) Depreciation D) Cash paid f
- Which of the following statements concerning the cash budget is true? a) The cash budget summarizes all cash receipts and disbursements during the budget period. b) The cash budget summarizes all ec
- Why is the statement of cash flows important for a full set of financial statements?
- On which financial statement(s) does the sales account appear?
- What are the three types of activities that are reported in the Statement of Cash Flows?
- Which balance sheet account provides evidence that Tootsie Roll records sales on an accrual basis rather than a cash basis? Explain.
- What is natural capital accounting? Name two income statement elements and explain how natural capital accounting might affect each element.
- Which financial statement would contain the following account balance: Accounts receivable? a. Balance Sheet b. Income Statement c. Statement of Owners' Equity
- What are the advantages of accrual versus cash accounting and why accrual basis financial statements provide more useful information?
- What are the key management assertions related to cash?
- What is the statement of cash flows? What information does it contain?
- Explain why the Cash Flow Statement is identified as a financial statement.
- Which financial statement's structure is closest to that of the basic accounting equation?
- Which financial statement would contain the following account balance: Equipment? a. Balance Sheet b. Income Statement c. Statement of Owners' Equity
Explore our homework questions and answers library
Browse
by subject