In june, cellars, inc. Collected $1,000 from a customer in advance. In july, cellars completed the first half of the job. In august, cellars completed the work. If cellars uses the cash basis of accounting, it will record revenues of ______.

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03-02-2022
Business

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In june, cellars, inc. Collected $1,000 from a customer in advance. In july, cellars completed the first half of the job. In august, cellars completed the work. If cellars uses the cash basis of accounting, it will record revenues of ______.

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anthougo anthougo · Answer 1 · 2022-02-09T10:35:49+01:00

If Cellars, Inc. uses the cash basis of accounting, it will record revenues of $1,000 in June and nothing in July and August for this transaction.

What is the cash basis of accounting?

The cash basis of accounting is an accounting method whereby revenues and expenses are recognized when cash is received or paid out.

The cash basis is unlike the accrual basis of accounting. With the accrual basis, revenue is recognized when earned. Expenses are recognized when liabilities are incurred regardless of when cash payment is made.

Data Analysis:

Cash Basis:

Cash $1,000 Deferred Revenue $1,000

Accrual Basis:

Cash $1,000 Deferred Revenue $1,000

July: Deferred Revenue $500 Service Revenue $500

August: Deferred Revenue $500 Service Revenue $500

Thus, if Cellars, Inc. uses the cash basis of accounting, it will record revenues of $1,000 in June and nothing in July and August.

Learn more about the cash and accrual bases of accounting at https://brainly.com/question/7331193