F2-M3 Adjusting Entries

Question 1

How do we convert cash basis to accrual when it comes to revenue

Answer 1

1) receivables: Subtract BEG A/R, Add ending A/R. 2) Unearned Rev or Contract liability, Add BEG unearned, Subtract ending

Question 2

How do we convert cash basis to accrual when it comes to Prepaid expenses and accrued liabilities

Answer 2

1)Prepaid expense represents an assets, reduction in assets is a reduction to NI.
2) Accrued liabilities go down represents less expenses being taken, add that reduction to NI