CASH AND ACCRUAL BASIS OF ACCOUNTING
ACCRUAL TO CASH BASIS
CASH TO ACCRUAL BASIS
 GROSS/NET SALES
Cash receipts from customers
Accounts Receivable, end.
(Accounts Receivable, beg.)
Notes Receivable, end.
(Notes Receivable, beg.)
Customer Advances, beg.
(Customer Advances, end.)
Accounts written off as worthless
Sales returns, discounts, and allowances
(ignore if Net Sales)
 PURCHASES
Cash paid for purchases
Accounts Payable, end.
(Accounts Payable, beg.)
 COST OF GOODS SOLD
Cash paid for purchases
Inventory, beg.
(Inventory, end.)
 INSURANCE EXPENSE
Cash paid for insurance
Prepaid Insurance, beg.
(Prepaid Insurance, end.)
 SALARIES/WAGES EXPENSE
Cash paid for salaries/wages
Salaries/Wages Payable, end.
(Salaries/Wages Payable, beg.)
 RENT REVENUE
Cash received for rent
Unearned Rent, beg.
(Unearned Rent, end.)
Rent Receivable, end.
(Rent Receivable, beg.)
 RENT EXPENSE
Cash paid for rent
Prepaid Rent, beg.
(Prepaid Rent, end.)
Rent Payable, end.
(Rent Payable, beg.)
(Used for Cash Flow – Operating Activities
Direct Method)
 COLLECTION FROM CUSTOMERS
Gross/Net Sales
Accounts Receivable, beg.
(Accounts Receivable, end.)
Notes Receivable, beg.
(Notes Receivable, end.)
Customer Advances, end.
(Customer Advances, beg.)
(Accounts written off as worthless)
(Sales returns, discounts, and allowances)
 PAYMENT TO SUPPLIERS
Purchases
Accounts Payable, beg.
(Accounts Payable, end.)
 COST OF GOODS SOLD
Purchases
Inventory, end.
(Inventory, beg.)
 PAYMENT FOR INSURANCE
Insurance Expense
Prepaid Insurance, end.
(Prepaid Insurance, beg.)
 PAYMENT FOR SALARIES
Salaries/Wages Expense
Salaries/Wages Payable, beg.
(Salaries/Wages Payable, end.)
 COLLECTION FROM RENT
Rent Revenue/Income
Unearned Rent, end.
(Unearned Rent, beg.)
Rent Receivable, beg.
(Rent Receivable, end.)
 PAYMENT FOR RENT
Rent Expense
Prepaid Rent, end.
(Prepaid Rent, beg.)
Rent Payable, beg.
(Rent Payable, end.)
 INTEREST REVENUE
Cash received for interest
Interest Receivable, end.
(Interest Receivable, beg.)
Discount Amortization on Debt Securities at
Amortized Cost
(Premium Amortization on Debt Securities at
Amortized Cost)
 INTEREST EXPENSE
Cash paid for interest
Interest Payable, end.
(Interest Payable, beg.)
 INCOME TAX EXPENSE
Cash paid for income tax
Income Tax Payable, end.
(Income Tax Payable, beg.)
Deferred Tax Asset, beg.
(Deferred Tax Asset, end.)
Deferred Tax Liability, end.
(Deferred Tax Liability, beg.)
 CASH RECEIVED FOR INTEREST
Interest Revenue
Interest Receivable, beg.
(Interest Receivable, end.)
(Discount Amortization on Debt Securities at
Amortized Cost)
Premium Amortization on Debt Securities at
Amortized Cost
 PAYMENT FOR INTEREST
Interest Expense
Interest Payable, beg.
(Interest Payable, end.)
 PAYMENT FOR INCOME TAX
Income Tax Expense
Income Tax Payable, beg.
(Income Tax Payable, end.)
Deferred Tax Asset, end.
(Deferred Tax Asset, beg.)
Deferred Tax Liability, beg.
(Deferred Tax Liability, end.)
 SINGLE ENTRY ACCOUNTING SYSTEM
Computation of Gross Sales
Cash Sales xxx
Sales on Account xxx
Trade Accounts and Notes Receivable, end
Collection of Trade Accounts and Notes Receivable
Accounts written off as worthless
Sales Return, Discounts, and Allowances
Trade Notes Receivable Discounted (NR directly credited)
Less: Trade Accounts and Notes Receivable, beg
Total Sales xxx

Computation of Gross Purchase

Cash Purchases xxx

Purchases on Account xxx
Trade Accounts and Notes Payable, end
Payment of Trade Accounts and Notes Payable
Purchases returns, discounts, and allowances
Less: Trade Accounts and Notes Payable, beg
Total Purchases xxx