Cash vs
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Questions and Answers

Which method of accounting records revenue when cash is received and recognizes expenses when they are paid?

  • IFRS
  • Cash basis of accounting (correct)
  • Accrual basis of accounting
  • GAAP

    • What is the primary difference between cash and accrual basis of accounting?

  • The time frame in which revenues and expenses are reported (correct)
  • The method suggested by GAAP and IFRS
  • The number of transactions involved
  • The complexity of the transactions

    • When is the accrual basis of accounting used?

  • When the entity has simple transactions
  • When the entity wants to record cash inflows and outflows
  • When the entity has numerous and complex transactions (correct)
  • When the entity wants to record receivables and payables

    • Why is the accrual basis of accounting commonly used by businesses?

    <p>It provides a more accurate depiction of the enterprise's performance and financial position</p> Signup and view all the answers

    What does the cash basis of accounting record?

    <p>Cash inflows and outflows</p> Signup and view all the answers

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