* The total money collected by the business for the sales of goods or services provided during the accounting period for that particular year.
* Including net sales or exchange of assets or anything that will increase the owner’s equity before any expenses are being subtracted.
* Reports the fees that are earned by the company during the accounting period in the income statement.
* It’s operating revenue, so it will appear at the beginning of the company’s income statement.
* Reporting of the sales of merchandise
* It is also revenue generated by the company’s sales operations before deducting expenses.
* Non-operating income/revenue for companies that do not involve money lending.
* Its interest earned by a company during a accounting period.
* Distribution of earnings to ...view middle of the document...
* The cost of the interest payments on borrowed money.
a. Cash basis: $600
b. Accrual basis: $1400
2) Under cash basis, revenue is only recorded when cash is received, after the service is provided. If majority of the transaction is on cash basis, the results produced will be similar to accrual basis and easier to handle and operate. On the other hand, it won’t be suitable for companies that conduct most of the transaction on credit. As for accrual basis, recording transactions when the service or sales is done whether cash is received or on credit. The accounting reports prepared using the accrual basis better states the true position and performance of the business for the accounting period. Although it is a troublesome process, however as for the long run, it would be better for the business. So accrual basis of accounting would better provides more information about my house-sitting business as accrual basis as I have explained that it shows the true position and performance of my business.
Carlon, S., et al. Accounting., 3rd Edition., 2009., Australia., Wiley., pg 141
Hoggett. J., et all. Accounting., 6th Edition., 2006., Australia., Wiley., pp 130-131
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