Which of the Following Statements About Cash Basis Accounting and Accrual

question 58

Multiple Choice

Which of the following statements about cash basis accounting and accrual basis accounting is correct?

• A)If payment is received at the same time a service is provided,it does not matter whether cash basis accounting or accrual basis accounting is used;both would record the transaction with the same journal entry.
• B)The cash basis of accounting works best when a lengthy delay exists between the timing of cash flows and the underlying business activities to which they relate.
• C)If a company receives a bill for rent for the period and decides to delay payment,the rent will not be recorded as an expense if accrual basis accounting is used.
• D)If the cash basis of accounting is used,the Deferred Revenue account is increased when a company receives a deposit in advance of services to be performed by the company.

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Definitions:

Negative Reinforcement

A behavioral concept where the removal of an unpleasant stimulus following a desired behavior increases the likelihood of that behavior being repeated in the future.

Punishment

A process in which a response is followed by a stimulus that decreases the likelihood of that response being repeated.

Undesirable Behaviours

Actions or reactions that are not wanted or are considered negative by society, a group, or an individual.

Strengthens

To increase in power, magnitude, or effectiveness.