A Small Business Owner Should Not Use the Cash Basis

question 20

Multiple Choice

A small business owner should not use the cash basis if

• A) The business extends credit
• B) The business has high debt
• C) The business has low sales
• D) The business has increasing expenses

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Definitions:

Available-for-Sale Debt Securities

Debt instruments not classified as held-to-maturity or trading securities, reported at fair value with unrealized gains or losses in other comprehensive income.

Exchange Rate

The rate at which one currency can be exchanged for another currency, affecting international trade and investments.

Canadian Dollars

The official currency of Canada, represented by the code CAD in the foreign exchange market.

U.S. Dollars

The official currency of the United States, used as a standard monetary unit.