would result in an increase in income under the cash basis but not an increase in income under the accrual basis.
A) The return of defective inventory purchased on account to a supplier where a full credit was given
B) The cash sale of inventory at a sales price in excess of the inventory's cost
C) The cash collection from a credit customer
D) The credit sale of inventory at a sales price in excess of the inventory's cost

Question

Quizplus · Accepted Answer

Under the cash basis, income is recognized when cash is received, so collecting cash from a credit customer increases income. Under the accrual basis, income is recognized when earned, so the collection does not affect income as it was already recognized when the sale was made.

Would Result in an Increase in Income Under the Cash