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a. Why do accrual-based financial statements provide more useful information than cash- based statements? b. On 10th December x1, a customer orders a car

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a. Why do accrual-based financial statements provide more useful information than cash- based statements? b. On 10th December x1, a customer orders a car from car manufacturer B for 20,000 CU. With the order, the customer makes an advance payment of 10%. B produces the car and delivers it on 15th January x2. Describe the revenue recognition and state the accounting entries for x1 and x2. c. European Car Sales plc. sells a new car with free 5,000 kilometre and free 20,000 kilometre services for a combined price of 41,500 CU. The cost of the car from the manufacturer is 30,000 CU. The two services normally cost 400 CU (5,000 kilometre) and 600 CU (20,000 kilometre) to do and are charged to casual customers at the rate of 800 CU and 1,200 CU retrospectively. Describe the revenue recognition and state all journal entries associated with the sale.

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