The adjustment to convert cash-basis collections from customers to accrual-basis revenue earned requires adding the ending balance in accounts receivable and subtracting the beginning balance in accounts receivable.

Question

Quizplus · Accepted Answer

To convert cash-basis collections to accrual-basis revenue, you add the ending accounts receivable (revenue earned but not yet collected) and subtract the beginning accounts receivable (revenue collected that was earned in a prior period).

The Adjustment to Convert Cash-Basis Collections from Customers to Accrual-Basis