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Questions and Answers
What is the primary difference between cash and accrual basis of accounting?
What is the primary difference between cash and accrual basis of accounting?
- The method of recording revenues and expenses
- The time frame in which revenues and expenses are reported (correct)
- The use of Generally Accepted Accounting Principles (GAAP)
- The complexity of the transactions
Which basis of accounting records revenue when cash is received and recognizes expenses when they are paid?
Which basis of accounting records revenue when cash is received and recognizes expenses when they are paid?
- Cash basis of accounting (correct)
- Accrual basis of accounting
- Single-entry accounting system
- Both cash and accrual basis of accounting
Which basis of accounting depicts the real performance and financial position of the enterprise for a specific period?
Which basis of accounting depicts the real performance and financial position of the enterprise for a specific period?
- Cash basis of accounting
- Accrual basis of accounting (correct)
- Single-entry accounting system
- Both cash and accrual basis of accounting
Why is the accrual basis of accounting the most commonly used practice by businesses?
Why is the accrual basis of accounting the most commonly used practice by businesses?
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