Which of the Following Statements About the Accrual Method of Accounting

question 104

Multiple Choice

Which of the following statements about the accrual method of accounting is false?

• A) The accrual method is the required method of accounting under GAAP.
• B) Every publicly held corporation must use the accrual method of accounting to prepare financial statements.
• C) The accrual method of accounting under GAAP and the accrual method of accounting for computing taxable income are identical.
• D) Corporations with more than $25 million average annual gross receipts are required to use the accrual method to compute taxable income.

---

Definitions:

Investments in Assets

The allocation of financial resources into physical or intangible items that are expected to produce future benefit.

Revenues

The sum of revenue a company earns from selling products or providing services in a given timeframe.

Decentralized

Refers to the distribution of functions, powers, people, or things away from a central location or authority.

Consolidated

Combined financial statements that present the assets, liabilities, and operating results of parent companies and their subsidiaries as a single entity.