Cash to Accrual, Single Entry

Question 1

What is sales
- cash basis
- accrual basis

Answer 1

• cash basis → cash sales + collection from customers (X AR)
• accrual basis → cash sales + credit sales (✓ AR)

Question 2

What is purchases
- cash basis
- accrual basis

Answer 2

• cash basis → cash purchases + payment to suppliers (X AP)
• accrual basis → cash purchases + credit purchases (✓ AP)

Question 3

Cash to Accrual Technique for Sales, Purchases, Other Income, Other Expenses

Answer 3

• Beginning Balance → normal side (Dr. or Cr.)
• Ending Balance → opposite

If searching for income → add liab, beg
If searching for expense → add asset, beg
(think of adjusting entry)

Question 4

Is there depreciation in cash basis?

Answer 4

Yes

Question 5

Is bad debts an expense (deducted) in cash basis?

Answer 5

No

Question 6

Formula for Single Entry

Answer 6

Net Increase or Decrease in Equity (from assets and liability)
Add : Decrease in Equity (Drawings, Dividends, Purchase of TS)
Less : Increase in Equity (Investments, Issuance of Shares, Reissue TS)
= Net Income or Loss