pawn shops unlimited recorded the following four transactions during april. which of these transactions…

pawn shops unlimited recorded the following four transactions during april. which of these transactions would have the same income statement impact in april regardless of whether the company used accrual - basis or cash - basis accounting? multiple choice paid $700 for an advertisement that appeared in the april 17 edition of the las vegas sun newspaper received $300 from customers for services performed in march received $600 from customers for services to be provided in may paid $1,800 for a six - month insurance policy covering the period july 1 - december 31

pawn shops unlimited recorded the following four transactions during april. which of these transactions would have the same income statement impact in april regardless of whether the company used accrual - basis or cash - basis accounting? multiple choice paid $700 for an advertisement that appeared in the april 17 edition of the las vegas sun newspaper received $300 from customers for services performed in march received $600 from customers for services to be provided in may paid $1,800 for a six - month insurance policy covering the period july 1 - december 31

Answer

Brief Explanations:

  1. Accrual - basis accounting: Recognizes revenues when earned and expenses when incurred, regardless of cash flow.
  2. Cash - basis accounting: Recognizes revenues when cash is received and expenses when cash is paid.
    • For the advertisement paid in April that appeared in April, under accrual - basis, it's an expense in April as it's incurred in April. Under cash - basis, it's also an expense in April as cash is paid in April.
    • For the $300 received for services in March, under accrual - basis, it was revenue in March (when services were performed), but under cash - basis, it's revenue in April (when cash is received).
    • For the $600 received for services in May, under accrual - basis, it's not revenue in April (services not yet performed), but under cash - basis, it's revenue in April (when cash is received).
    • For the insurance paid covering July - December, under accrual - basis, no expense is recognized in April (pre - paid expense, will be expensed over the coverage period). Under cash - basis, it's an expense in April (when cash is paid).

Answer:

Paid $700 for an advertisement that appeared in the April 17 edition of the Las Vegas Sun newspaper