Pawn Shops Unlimited recorded the following four transactions during April.Which of these transactions would have the same income statement impact in April regardless of whether the company used accrual-basis or cash-basis accounting?
A)Received $600 from customers for services to be provided in May.
B)Paid $1,800 for a six-month insurance policy covering the period July 1-December 31.
C)Paid $700 for an advertisement that appeared in the April 17 edition of the Las Vegas Sun newspaper.

Question

Quizplus · Accepted Answer

Transaction C has the same income statement impact in April regardless of whether the company used accrual-basis or cash-basis accounting because the advertisement expense is recognized in the month that it was placed. The other transactions involve either receiving or paying for services or goods that will impact a later period and therefore would have different income statement impacts depending on the accounting method used.

Pawn Shops Unlimited Recorded the Following Four Transactions During April