The Accrual Basis of Accounting

question 121

Multiple Choice

The accrual basis of accounting

• A) Is generally accepted for external reporting because it gives more useful information
• B) Is not acceptable because it gives incomplete information about cash flows
• C) Recognizes revenues when received
• D) Recognizes expenses when paid
• E) Eliminates the need for adjusting entries

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Definitions:

Potential Users

Individuals or entities that could use or benefit from a product or service but have not yet done so.

Optimal Combination

The best mix of different factors or elements (such as resources or inputs) to achieve a desired outcome or objective.

Inputs

The resources used in the production process, including labor, raw materials, and capital.

Least Costly

Refers to the option that requires the smallest amount of expense or effort to achieve a given outcome.