Jim Yount, M.D., keeps his accounting records on the cash basis. During 2015, Dr. Yount collected $350,000 from his patients. At December 31, 2014, Dr. Yount had accounts receivable of $40,000. At December 31, 2015, Dr. Yount had accounts receivable of $70,000 and unearned revenue of $10,000. On the accrual basis, how much was Dr. Yount's patient service revenue for 2015?

Question

Quizplus · Accepted Answer

To convert from cash basis to accrual basis, adjust for changes in accounts receivable and unearned revenue. Start with cash collected ($350,000), add the increase in accounts receivable ($70,000 - $40,000 = $30,000), and subtract the increase in unearned revenue ($10,000). Thus, $350,000 + $30,000 - $10,000 = $370,000.