Which of the Following Is True About Accrual Basis Accounting

question 72

Multiple Choice

Which of the following is true about accrual basis accounting and cash basis accounting?

• A) Net Income is generally larger under accrual basis accounting than cash basis accounting.
• B) GAAP does not require accrual basis accounting be used for external reports.
• C) Accrual basis accounting and cash basis accounting will always produce the same results.
• D) Accrual basis accounting provides a better measure of operating performance than does cash basis accounting

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Definitions:

Consumption

The use of goods and services by households or individuals, usually the largest component of GDP.

Function

In mathematics and computer science, a relation between a set of inputs and a set of permissible outputs with the property that each input is related to exactly one output.

Labor Force

The total number of people who are of working age, capable of working, and actively seeking employment or currently employed.

Employed

The status of having paid work, being engaged in a job or business.