Accounting Methods

University of Phoenix Week 2 Homework revisited

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

 

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