Which statement is true regarding the cash basis of accounting? a. Revenues are reported in the period in which a service has been performed or a product has bee delivered. O b. Expenses are reported in the same period as the revenues to which they relate. O c. Revenues are reported in the period in which cash is received, and expenses are reported when cash is paid out. O d. The cash basis of accounting is used by most large businesses to provide accurate financial statements for users.

Which statement is true regarding the cash basis of accounting? a. Revenues are reported in the period in which a service has been performed or a product has bee delivered. O b. Expenses are reported in the same period as the revenues to which they relate. O c. Revenues are reported in the period in which cash is received, and expenses are reported when cash is paid out. O d. The cash basis of accounting is used by most large businesses to provide accurate financial statements for users.

College Accounting (Book Only): A Career Approach

13th Edition

ISBN:9781337280570

Author:Scott, Cathy J.

Publisher:Scott, Cathy J.

Chapter5: Closing Entries And The Post-closing Trial Balance

Section: Chapter Questions

Problem 5QY: Under the cash basis of accounting, which of the following statements is true? a. Revenue is...

See similar textbooks

Similar questions

Which of the following statements is true? Under cash-basis accounting, revenues are recorded when a company satisfies its performance obligations and expenses are recorded when incurred. Accrual-basis accounting records both cash and noncash transactions when they occur. Generally accepted accounting principles require companies to use cash-basis accounting. The key elements of accrual-basis accounting are the revenue recognition principle, the expense recognition principle, and the historical cost principle.
Revenues and expenses must be recorded in the accounting period in which they were earned or incurred, no matter when cash receipts or outlays occur under which of the following accounting methods? A. accrual basis accounting B. cash basis accounting C. tax basis accounting D. revenue basis accounting
Which of these transactions would not be part of the cash flows from the operating activities section of the statement of cash flows? A. credit purchase of inventory B. sales of product, for cash C. cash paid for purchase of equipment D. salary payments to employees
Under the cash basis of accounting, which of the following statements is true? a. Revenue is recorded when it is earned, regardless of when the cash is received. b. Expenses are recorded when they are paid. c. Expenses are recorded when they are incurred, regardless of when the cash is paid. d. The cash basis of accounting is allowed for all corporations.
What is the effect on the accounting equation when a business pays the balance due on accounts payable?
Why is using the direct method to prepare the operating section of the statement of cash flows more challenging for accountants than preparing the balance sheet, income statement, and retained earnings statement?
That a business may only report activities on financial statements that are specifically related to company operations, not those activities that affect the owner personally, is known as which of the following? A. separate entity concept B. monetary measurement concept C. going concern assumption D. time period assumption
Name a source document that provides information about each of the following types of business transactions: a. Cash payment b. Cash receipt c. Sale of goods or services d. Purchase of goods or services
Which of the following is the principle that a business must report any business activities that could affect what is reported on the financial statements? A. revenue recognition principle B. expense recognition (matching) principle C. cost principle D. full disclosure principle
Which of the following statements is false? A. Noncash activities should be reported in accrual basis financial statements. B. Net cash flow from operating activities relates to normal business operations. C. Net income usually equals net cash flow from operating activities. D. The statement of cash flows is an essential part of the basic financial statements.
Given the following information, convert Robin Companys salaries expense from its income statement into payments to employees for its statement of cash flows.