Complete Question:
Assuming that Sooner Company uses accrual-basis accounting, when would the company record the expense related to the supplies?
A. May 2
B. May 8
C. May 15
D. May 20
Answer:
May 15th company would record the expense related to the supplies.
Explanation:
Accrual basis is a way to report income and costs incurred in financial activities. The accrual justification includes the use of purchase tax deductions, bad debts and technological progress of inventories, which arise in advance of these products.
An illustration of accrual accounting is to report sales as soon as the consumer gets the associated invoice.
Although it is more complex and nuanced than cash accounts, most businesses use accrual accounting as normal accounting procedure. Many companies have postponed accounts due and accounts receivable for a long time, for example, selling credit or ventures generating revenue streams. These incidents also change the finances of the firm although no cash is earned automatically.
