Question

Meadows manufacturing follows the accrual system. an accrual results when ____________ and a deferral results when __________.

a.$6,000 cash is received before a customer has been billed; $4,500 cash is paid for next quarter's insurance for property.
b.$6,000 cash is received before a customer has been billed; $4,500 cash is paid for previous quarter's insurance for property.
c.$6,000 cash is received after a customer has been billed; $4,500 cash is paid for next quarter's insurance for property.
d.$6,000 cash is received after a customer has been billed, $4,500 cash is paid for previous quarter's insurance for property.

Answer 1

The answer is, when "$6,000 cash is received after a customer has been billed" and a deferral results when "$4,500 cash is paid For next quarter's insurance For property".
Accrual system refers to an accounting technique that measures the execution and position of an organization by perceiving economic occasions irrespective to when money exchanges happen.The general thought is that financial occasions are perceived by coordinating incomes to costs at the time in which the exchange happens as opposed to when installment is made. This strategy permits the present money inflows/outflows to be joined with future expected money inflows/outflows to give a more exact picture of an organization's present budgetary condition.