Author Question: Describe the accrual basis of accounting. What will be an ideal ... (Read 73 times)

drink · **on:** Jul 5, 2018

Describe the accrual basis of accounting.

What will be an ideal response?

Question 2

Using a perpetual inventory system, the entry to record the purchase of 30,000 of merchandise on account would include a
a. debit to Accounts Payable
b. debit to Merchandise Inventory
c. credit to Merchandise Inventory
d. credit to Sales

irishcancer18 · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

The accrual basis, or method, of accounting is a system of measuring and reporting revenues when they are earned and expenses in the accounting period when incurred. Revenues are considered earned when the earnings process is completed, such as when goods are shipped or services performed, and expenses are considered incurred when assets are consumed or liabilities are created in the process of earning revenue.

Answer to Question 2

b