Which Statement Is Correct

question 113

Multiple Choice

Which statement is correct?

• A) As long as a company consistently uses the cash basis of accounting generally accepted accounting principles allow its use.
• B) The use of the cash basis of accounting violates both the revenue recognition and expense recognition principles.
• C) The cash basis of accounting is objective because no one can be certain of the amount of revenue until the cash is received.
• D) As long as management is ethical there are no problems with using the cash basis of accounting.

---

Definitions:

Surplus

An excess amount of a product or resource relative to demand, often leading to lower prices or stockpiling.

Equilibrium Price

Equilibrium price is the price point at which the quantity of goods supplied equals the quantity of goods demanded in the market.

Price Ceiling

A legal maximum price that can be charged for a good or service, typically set by the government to ensure affordability.

Price Floor

A government or regulatory-imposed minimum price for a good or service, intended to prevent prices from falling below a certain level.