Which of the Following Is a Disadvantage of Using a Cash-Based

question 69

Multiple Choice

Which of the following is a disadvantage of using a cash-based accounting system?

• A) It may be misleading with respect to understanding a company's actual cash position.
• B) It can distort measure of the profitability of a business.
• C) It needs greater bookkeeping requirements.
• D) It is a more sophisticated approach to accounting.
• E) It provides an accurate indication of the profitability of a business.

---

Definitions:

Interdependence

The mutual reliance among businesses, individuals, industries, or economies, where the actions of one participant affect the outcomes of another.

Rivals

Competitors within the same industry or market that vie for the same customer base.

Herfindahl-Hirschman Index

A measure of market concentration to evaluate the potential for anticompetitive behavior or monopolies within an industry.

Competitive Market

A market structure characterized by a large number of buyers and sellers, free entry and exit, and a product that is homogeneous across sellers, leading to price determination by market forces.