The adjustment necessary to convert payments for other operating costs, cash-basis, to operating expenses, accrual-basis, is to add ending prepaid expenses to the beginning prepaid expenses subtract the beginning accrued expenses and add the ending accrued expenses.

Question

Quizplus · Accepted Answer

To convert cash-basis payments to accrual-basis expenses, you subtract beginning prepaid expenses, add ending prepaid expenses, add beginning accrued expenses, and subtract ending accrued expenses.

The Adjustment Necessary to Convert Payments for Other Operating Costs