This preview shows page 1. Sign up to view the full content.
Unformatted text preview: cash based system accounts do not require adjusting, because transactions are recorded only when cash is received or paid. Under the accrual basis the $20,000 is recorded when it is earned. Making this adjustment to accounts receivable correct. Cliff Hall was not very professional and ethical when it came to applying for the loan at the second bank. Cliff should have been honest and explained why he was denied in the first place. Also, when Cliff first started his business he should have automatically used the accrual accounting system because it is required. This could have saved him wasted time and being denied. Cliff should have also brought his original financial statements and the revised one to the second bank to have proof. Sources; Owner's Toolkit: Small Business Guide www.toolkit.com/small_business_guide/index.aspx Cash-Basis and Accrual Accounting Description www.accountingaide.com...
View Full Document
- Spring '11