Generally, an Advantage to Using the Cash Method of Accounting

question 7

True/False

Generally, an advantage to using the cash method of accounting, as compared to the accrual method, is that under the cash method, income is not recognized until it is collected rather than being taxed as soon as the taxpayer has the right to collect the income.

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Definitions:

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

Soft Drink Dispensing

The process or equipment used for serving soft drinks, typically seen in restaurants, convenience stores, or vending machines.

Marginal Costs

The augmentation in total expenditures resulting from the production of an additional unit of a product or service.

Law of Diminishing

Refers to the Law of Diminishing Returns, which states that continuing to increase one input, while holding others constant, will eventually result in smaller and smaller additions to output.