Consider the following transactions: 1.The company uses supplies purchased in the previous period,$1,500.2.The company pays cash for rent in advance,$6,000.3.The company repays a loan to the bank,$10,000 (ignore any interest cost).The amount of accrual-basis expense is _____ while the amount of cash-basis expense is _____.
A)$6,000;11,500
B)$6,000;$16,000
C)$1,500;16,000
D)$1,500;$6,000

Question

Quizplus · Accepted Answer

Under the accrual basis, expenses are recognized when incurred, so using supplies is an expense of $1,500. Under the cash basis, expenses are recognized when paid, so only the rent paid in advance is considered, totaling $6,000.

Consider the Following Transactions: 1