A Month in the Life of a Faculty from cash vs. accrual accounting perspective

The Faculty provides web design services to a number of clients and has been using the cash basis of accounting. It used a spread-sheet to keep up with the business's cash receipts and payments. Total cash on hand increased by $15732.70 (from $7911.12 to $23643.82) during the month.

The following additional information is gathered in the process of preparing the accrual-based income statement:

Revenues:

-    The $9000 deposit on April 7 was an advance payment for work to be performed equally during April, May, and June.

-    The $11788.45 deposit on April 20 was collection of an account for which the work was performed during January and February.

-    During April, services valued at $2000 were performed and billed, but not yet collected.

Expenses:

-    Payroll -- The $700 payment on April 3 related $650 to the prior month. An additional $350 is accrued by the end of April, but not paid.

-    Rent -- The amount paid corresponded to the amount used.

-    Server -- The $1416.22 payment on April 15 related $500 to prior month's usage.

-    Administrative -- An additional $600 is accrued by the end of April, but not paid.

Fill in the boxes to prepare the cash-basis and accrual-basis income statement (IS), by using the information from the spread-sheet and the additional information provided.

 NOTE! All numbers should be fill in using 2 decimals (ex. 300.00)

A Week in the Life of a Small Government from cash vs. accrual accounting perspective

Fill in the below boxes by analysing the effects of the transactions on the financial statements: Cash Flow Statement (CFS), Operating Statement (OS) and Balance Sheet (BS).

Important !!!  If you get negative amount, fill in the boxes without the "-" sign !!!

Openings values are: Bank 50; Receivables 20; Fixed assets 700; Depreciation 0; Borrowings 500.

Transactions encountered during the period are:

a)    Corporate taxpayers are required to make tax payments of $100 million to the government, but only $90 million is received. At the end of the week, $10 million is outstanding. The effects on the financial statement are:

CFS:

OS:

BS:

b)   The government sells fixed assets for $100 million. The assets had been valued at $100 million. $100 million is received. The effects on the financial statement are:

CFS:

OS:

BS:

c)    Government salary payments are made during the week. In addition to paying employees $60 million, the government is obligated to provide for their pensions when they retire—employees earned $30 million in future pension rights during the period. The effects on the financial statement are:

CFS:

OS:

BS:

d)   The government settles a long-running legal dispute. It agrees to pay $30 million to the plaintiff in 2 months’ time. The effects on the financial statement are:

CFS:

OS:

BS:

e)    All the government’s borrowings are held in foreign exchange. The exchange rate declined by 2% during the week $10 million. The effects on the financial statement are:

CFS:

OS:

BS:

Financial statements reveal the effects after all the transactions as follows:

Cash accounting (CFS Bank balance) reports a

Accrual accounting (OS) shows a

Accrual accounting (BS) exhibits closing Net Assets of