Question - An entity is converting its accrual-based accounting records to a cash basis. The amount of $53 000 (including $7 000 depreciation) was shown as 'Other expenses' in the statement of profit or loss. On inspection of the balance sheet, you find that the beginning and closing balances for 'Prepaid expenses' were $13 000 and $15 000 respectively. Also, the beginning and closing balances of 'Accrued expenses' were $5 000 and $11 000 respectively. What is the actual amount of cash paid for other expenses during the period?
Required -
a. What is the actual amount of cash paid for other expenses during the period?
b. Compare the cash basis of accounting with the accrual basis of accounting.
c. Assess the information benefits of both accounting approaches.