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    Jenyl Mae Noble
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    This document provides an explanation and example of converting between cash basis and accrual basis accounting for income and expenses. It shows how to calculate income and expenses under the accrual basis by adding amounts earned/incurred this year but received/paid in another year, and subtracting amounts earned/incurred in another year but received/paid this year. It then demonstrates converting the accrual basis amounts to the cash basis by making similar additions and subtractions.

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    This document provides an explanation and example of converting between cash basis and accrual basis accounting for income and expenses. It shows how to calculate income and expenses under the accrual basis by adding amounts earned/incurred this year but received/paid in another year, and subtracting amounts earned/incurred in another year but received/paid this year. It then demonstrates converting the accrual basis amounts to the cash basis by making similar additions and subtractions.

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    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    24 views2 pages

    CASE

    Uploaded by

    Jenyl Mae Noble
    This document provides an explanation and example of converting between cash basis and accrual basis accounting for income and expenses. It shows how to calculate income and expenses under the accrual basis by adding amounts earned/incurred this year but received/paid in another year, and subtracting amounts earned/incurred in another year but received/paid this year. It then demonstrates converting the accrual basis amounts to the cash basis by making similar additions and subtractions.

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
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    of 2

    Cash to accrual p.

    445 Vol 3, Valix 2014


    (hypothetical figures)
    Income received - cash basis 1,200,000 All cash received this year, regardless whe
    Add: Unearned income beg 800,000 Earned this year, received last year
    Income receivable end 450,000 Earned this year, receivable next year
    2,450,000

    Less: Unearned income end -600,000 To be earned next year, received this year
    Income receivable, beg -250,000 Earned last year, received this year
    Income for the current year-accrual basis 1,600,000 All cash earned this year, regardless when

    Accrual to cash
    Accrual income for the current year 1,600,000 All income earned this year, regardless wh
    Add: Unearned income, end 600,000 Received this year, to be earned next year
    Income receivable, beg. 250,000 Received this year, earned last year
    Less: Unearned income, beg -800,000 Received last year, earned this year
    Income receivable, end. -450,000 Receivable next year, earned this year
    Cash basis income 1,200,000

    Cash to accrual
    Expenses paid in cash this year 2,000,000 Expenses paid this year, regardless when i
    Add: Prepaid expenses, beg. 700,000 Incurred this year, paid last year
    Accrued expenses, end 1,200,000 Incurred this year, to be paid next year
    Less: Accrued expenses, beg. -950,000 Incurred last year, paid this year
    Prepaid expenses, end -1,500,000 To be incurred next year, paid this year
    Expenses - accrual basis 1,450,000 Expenses incurred this year, regardless wh

    Accrual to cash
    Expenses - accrual basis 1,450,000
    Add Accrued expenses, beg 950,000 Paid this year, incurred last year
    Prepaid expenses, end 1,500,000 Paid this year, to be incurred next year
    Less Prepaid exp, beg -700,000 Paid last year, incurred this year
    Accrued exp, end -1,200,000 To be paid next year, incurred this year
    Expenses paid in cash this year 2,000,000
    ash received this year, regardless when earned
    ed this year, received last year
    ed this year, receivable next year

    e earned next year, received this year


    ed last year, received this year
    ash earned this year, regardless when received

    ncome earned this year, regardless when received


    ived this year, to be earned next year
    ived this year, earned last year
    ived last year, earned this year
    ivable next year, earned this year

    nses paid this year, regardless when incurred


    red this year, paid last year
    red this year, to be paid next year
    red last year, paid this year
    e incurred next year, paid this year
    nses incurred this year, regardless when paid

    this year, incurred last year


    this year, to be incurred next year
    last year, incurred this year
    e paid next year, incurred this year

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