Sorry sorry @spartans92, I made a simple mistake. The accrual NI should be 80 you're correct. Tough to do the JE on the forum.
Basically, in conceptual terms, when AR goes down, we already recognized it as a sale when we originally booked AR. We only recognized it in cash when we recieve the actual cash, I.E. when ar decreases because cash increases. The opposite goes for AP, if I increase AP it's like I'm getting cash so it increases my cash NI.
Honestly though during the exam I didn't think of it like that at all. I would just JE the differences and you come to the answer, and it saves you a lot of time.
I can't edit my previous post but heres the <correct> JE
The real JE should be this:
Dr: Cash 100
Cr: AP 10
Cr: AR 10
Cr: accrual inc 80
FAR- taken 8/11/16....now the wait begins
AUD- scheduled 9/8/16
BEC- scheduled 10/9/16
REG-scheduled 12/10/16
Live a few years like most people won't, to live the rest of your life like most people can't.
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