When converting from cash-basis to accrual-basis accounting, which of the following adjustments should be made to cash receipts from customers to determine accrual-basis service revenue?
A) Subtract ending accounts receivable.
B) Subtract beginning unearned service revenue.
C) Add ending accounts receivable.
D) Add cash sales.

Question

Quizplus · Accepted Answer

When converting from cash-basis to accrual-basis accounting, we need to add any revenues earned but not received in cash yet. This means we need to add the ending accounts receivable balance to cash receipts from customers to determine accrual-basis service revenue. This is because the ending accounts receivable represents the amount of revenue that has been earned (i.e. services performed) but not yet collected in cash.

When Converting from Cash-Basis to Accrual-Basis Accounting, Which of the Following