Cash vs Accrual Accounting
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Questions and Answers

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?

  • 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?

  • 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?

    <p>It reflects the real performance and financial position of the enterprise</p> Signup and view all the answers

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