GAAP's Definition for Inventory and Provision of Guidelines for Inventory

question 88

Multiple Choice

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Definitions:

Accrual Basis

An accounting method that records revenues and expenses when they are earned or incurred, regardless of when cash is exchanged.

Generally Accepted Accounting Principles

Generally Accepted Accounting Principles (GAAP) are a collection of commonly followed accounting standards and procedures for financial reporting.

Cash Basis

An accounting method where revenues and expenses are recorded only when cash is received or paid, regardless of when transactions occur.

Supplies Expense

The cost incurred from using or consuming supplies within a business operation.