Generally, Accrual Basis Accounting Results in a More Accurate Measurement

question 84

True/False

Generally, accrual basis accounting results in a more accurate measurement of profit the period than does cash basis accounting.

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Definitions:

Accounts Payable

Obligations of a business to pay for goods or services that have been delivered but not yet paid for.

Inventory

The total amount of goods and materials a company holds for the purpose of resale or production, including raw materials, work-in-progress, and finished goods.

Profit Margin

A financial ratio that calculates the amount of net income earned with each dollar of sales by dividing net profit by total revenue.

ROE

Return on Equity, which measures a corporation's financial productivity, is computed by dividing the net income by the total equity of shareholders.