The adjustment necessary to convert cash-basis payments for other operating costs to accrual-basis operating expenses requires the addition of ending prepaid expenses to the beginning prepaid expenses, subtracting the beginning accrued expenses from this amount, and finally adding the ending accrued expenses.

Question

Quizplus · Accepted Answer

The correct adjustment to convert cash-basis payments for other operating costs to accrual-basis operating expenses involves starting with cash payments, adding the beginning accrued expenses, adding the increase in prepaid expenses (or subtracting the decrease), subtracting the ending accrued expenses, and subtracting the beginning prepaid expenses (or adding the decrease).

The Adjustment Necessary to Convert Cash-Basis Payments for Other Operating