When Using Accrual Basis Accounting, Financial Statement Preparers Must

question 117

Multiple Choice

When using accrual basis accounting, financial statement preparers must

• A) provide a supplementary note detailing that accrual accounting has been used.
• B) state within a note that cash basis accounting is not acceptable under GAAP.
• C) provide no supplementary note because the underlying assumption is that accrual basis of accounting is used on all financial statements.
• D) none of the above.

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Definitions:

Effective Usury Laws

Laws designed to set maximum interest rates that can be charged on loans, to prevent lenders from charging excessively high rates.

Money Markets

Financial markets for short-term borrowing and lending, dealing in securities such as Treasury bills and commercial paper.

Investment-Demand

Investment-Demand entails the desire for assets or goods that will provide returns over time, heavily influenced by interest rates, future profit expectations, and economic conditions.

Interest Rate

The part of the loan amount that is levied as interest by the lender on the borrower, often presented as an annual percentage rate of the loan's total value.