Under the cash basis of accounting = The matching principle is ignored.

Which of the following statements regarding accrual versus cash basis of accounting is true? =
The cash basis is less useful in predicting the timing and amounts of future cash flows.

When converting from cash basis to accrual basis of accounting, which of the following
adjustments should be made to cash paid for operating expenses to determine accrual basis
operating expenses to determine accrual basis operating expense? = Subtract ending prepaid
expense

Total net income over the life of an entity is = The same under the cash basis than under the
accrual basis

Under the accrual basis of accounting cash receipts and disbursements may = Precede, coincide
with, or follow the period in which revenue and expenses are recognized

Tower Company failed to recognize accruals and prepayments during the first year of operations.

The income before tax is P5,000,000.

The accruals and prepayments not recognized at the end of the year are:

Prepaid insurance 200,000

Accrued wages 250,000
Rent revenue collected in advance 300,000
Interest receivable 100,000

What is the corrected income before tax? = 4,750,000