1SOL3.0 - ValenciaCommunityCollege Assignment3.0...

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Valencia Community College Assignment 3.0 Solution – Battiste 3. The accrual method and cash method differ regarding when to record revenue and expenses. The cash method requires that revenues are recorded when cash is received from customers from the sale of goods or services. The cash method records expenses when cash is paid to operate a business. The accrual method, on the other hand, requires that revenues be recognized when earned and expenses when incurred. This means when they happen which could be before, at the same time, or after cash is received or paid. Under the accrual system of accounting, revenues are earned when the sale is complete. For example, when goods are shipped to the customer revenue from the sale of goods is earned even if the cash isn’t collected yet. Revenue from a service engagement, such as consulting, is earned when the work is done. The accrual method of accounting recognizes expenses when the costs are incurred. A cost is incurred when a resource is used up or a liability created in the process of earning
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This note was uploaded on 06/14/2011 for the course ACG 2021 taught by Professor Larson during the Spring '08 term at Valencia.

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1SOL3.0 - ValenciaCommunityCollege Assignment3.0...

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