Accural basis of accounting

During the year, black diamond company earned $86 500 in revenue. at year end only $65 000 of that revenue had been collected. also, black diamond inccured $44 000 of expenses of which only $35 000 had been paid.

Determine profit or loss (total comphersive income) for the year under

(a) the cash basis of accounting

(b) the accural basis of accounting.

The following documentation is commonly used in a creditor-based expenditure cycle:

1. purchase requisition,

2. purchase order,

3. goods received note,

4. receiving report,

5. creditor invoice, and

6. disbursement voucher.

Required

For each of the above, describe the purpose and function of the documentation within the expenditure cycle.

Solution: