A company has the following three events in December:

December 1 - Pay last month's rent (November), $500.

December 15 - Pay rent for the current month (December), $500.

December 31 - Pay rent for the following year, $6,000.

How much would be recorded as Rent Expense for the month of December using accrual-basis accounting?

A) $6,500.

B) $7,000.

C) $1,000.

D) $500.

Answer: D

The primary difference between accrual-basis and cash-basis accounting is:

A) The timing of when revenues and expenses are recorded.

B) Cash-basis accounting is allowed for financial reporting purposes but not accrual-basis accounting.

C) Accrual-basis accounting violates both the concepts of revenue recognition and expense recognition.

D) Adjusting entries are only a necessary part of cash-basis accounting.

Answer: A