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The Accounting Framework and Concepts
Quick questions on Accrual versus cash basis explained: H2 Principles of Accounting
4short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is the two bases compared?Show answer
Under the cash basis, profit is simply cash in minus cash out. Under the accrual basis, profit is income earned minus expenses incurred, which requires year-end adjustments to move items into the correct period.
What is q1?Show answer
State how the accrual basis recognises (a) income and (b) expenses. [2 marks]
What is q2?Show answer
A business pays \6\,000$ rent covering the period ending three months after the year end. How much is this year's expense and what is the rest? [3 marks]
What is q3?Show answer
Explain why depreciation is consistent with the accrual basis. [3 marks]
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