AMR received $1,600 on a sale using the cash basis of accounting and did not record a sale on account. This transaction should have been recorded under accrual accounting. The balance sheet problem, using the cash basis of accounting, is the failure to record an entry to which account?

Question

Quizplus · Accepted Answer

Under accrual accounting, sales should be recorded when earned, not when cash is received. Since AMR did not record a sale on account, the Accounts Receivable account is missing the entry.

AMR Received $1,600 on a Sale Using the Cash Basis