Question

The following events pertain to Jasper Corporation:May 1 Jasper purchased office supplies of $3,000 on account.May 5 The office supplies were shipped to Jasper.May 8 Jasper used these office supplies for a one-time event.May 9 Jasper paid $3,000 cash for the office supplies purchased on May 1.Using cash-basis accounting, on which date should Jasper record supplies expense?a. May 1b. May 5c. May 8d. May 9

Answer 1

Answer:

D. May 9

Explanation:

In cash-basis accounting, revenues are recognized only when cash is paid to the company, and expenses are recognized only when the company pays cash to cover them.

In this case, the office supplies were purchased on May 1, but Jasper Corp only paid the cash on May 9, therefore, this is the date to register the transaction.