Which of the Following Is a Benefit of Using an Accrual

question 49

Multiple Choice

Which of the following is a benefit of using an accrual accounting system?

• A) It accurately specifies a company's current cash position.
• B) It is only appropriate for cash-based businesses.
• C) It greatly reduces the demand on bookkeeping.
• D) It can be used to affect tax bills.
• E) It provides a more accurate indication of the profitability of a business.

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Definitions:

Short-Term

Refers to a time horizon or a period within twelve months or within an entity's operating cycle if it's longer.

Accumulating

The process of gathering or increasing an amount of something over time, often referring to interest, benefits, or assets.

Vesting

The process by which an employee acquires non-forfeitable rights over employer-provided stock incentives or contributions made to the employee's pension plan, often based on length of service.

AASB 119/IAS 19

Accounting standards that dictate the accounting for employee benefits, including pensions and other post-employment benefits, aligning with international financial reporting standards.