Which of the following situations would result in an increase in profit under the accrual method of accounting,but would NOT result in an increase in profit under the cash-basis method of accounting?
A)Use of supplies purchased earlier
B)Receipt of cash for services that were performed earlier on credit
C)Performance of services on credit
D)Purchase of supplies for cash

Question

Quizplus · Accepted Answer

Under the accrual method, revenue is recognized when earned, so performing services on credit increases profit. Under the cash-basis method, revenue is only recognized when cash is received, so performing services on credit does not increase profit until payment is received.

Which of the Following Situations Would Result in an Increase