Author Question: The employee's earnings record is a summary of the earnings of all employees for each pay period. ... (Read 51 times)

fbq8i · **on:** Jul 5, 2018

The employee's earnings record is a summary of the earnings of all employees for each pay period.
a. True
b. False
Indicate whether the statement is true or false

Question 2

Explain the differences between cash-basis and accrual accounting.

What will be an ideal response?

Jane · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

False

Answer to Question 2

Cash-basis accounting is a system based on the exchange of cash. In this system, revenue is recognized only when cash is collected, and an expense is recognized only when cash is disbursed. Cash-basis accounting is not an acceptable method under GAAP.

Accrual accounting is the required method of reporting under GAAP. Under accrual accounting, revenues are recognized when earned, and expenses are recognized when incurred. The recognition of revenues and expenses does not always occur in the same accounting period as the related cash receipts and cash disbursements.