16. if we had used cash - basis accounting, what would have been missing from company a’s income statement…
16. if we had used cash - basis accounting, what would have been missing from company a’s income statement, and what would be missing from its balance sheet, at june 30. - salary payable - salary expense
Answer
Brief Explanations:
Cash - basis accounting records transactions only when cash is received or paid. Salary payable is a liability that represents unpaid salaries, which is not recognized under cash - basis accounting as there is no cash outflow yet. Salary expense under cash - basis accounting is only recorded when cash is paid for salaries, so an accrued but unpaid salary expense would be missing if using cash - basis accounting.
Answer:
From the income statement, salary expense would be missing. From the balance sheet, salary payable would be missing.