An expense incurred in 2011 is not paid until 2012. Using the accrual basis of accounting,...
An expense incurred in 2011 is not paid until 2012. Using the accrual basis of accounting, the expense should appear on:
A) the 2011 income statement.
B) the 2012 income statement.
C) neither the 2011 nor the 2012 income statement.
D) both the 2011 and 2012 income statements.
Homework Answers
Answer - the 2011 income statement.
Reason - accrual basis accounting records a transaction based on the occurrence of expenditure or earning of income. It doesn't matters whether cash is received in same year or not. So an expenditure incurred in 2011 will be recorded in income statement in the same year i.e 2011.
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