Week 2 EOC: Chapter 2 Question 4

Answers:

a. Lisas's Accrual accounting method shows the higher profit because "revenue is recorded when it is earned, regardless of when it is collected, and expenses are recorded when they are incurred, regardless of when they are paid." So in conclusion it will show the big picture once all accounts are reconciled.

b. The accounting Method that best shows the amount of cash on hand would be the accrual method.

c. The Accrual Method "instructs accountants to record expenses when they are incurred regardless of when they are paid."

d. The accounting method that most accurately shows the expenses incurred regardless of when they are paid is the Accrual accounting system.

e. The Cash accounting system would show actual cash inflows and outflow because "the system is a method that records revenue as being earned when it is actually received."

f. The accounting method that shows the most accurate reflection of the restaurants true profitability is the Accrual accounting system.