Fireside,Inc.uses accrual basis accounting.Its balance sheets reported Accounts Receivable of $12,000 at the end of its first year and $18,000 at the end of its second year.Its income statement reported Sales Revenue of $120,000 in its second year.What would Fireside's revenues have been if it had used cash basis accounting?

Question

Quizplus · Accepted Answer

Increase (Decrease)in Accounts Receivable = Ending balance − Beginning balance
= $18,000 − $12,000 = $6,000
Cash basis revenues = Sales revenue − (Increase (Decrease)in Accounts Receivable)
= $120,000 − $6,000 = $114,000