If Revenues Are Recognized and Recorded When Earned, the Company

question 78

Multiple Choice

If revenues are recognized and recorded when earned, the company is using the:

• A)cash basis of accounting.
• B)accrual basis of accounting.
• C)adjustment basis of accounting.
• D)the expense basis of accounting.

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Definitions:

Payback Period

The amount of time it takes for an investment to generate cash flows sufficient to recover its initial cost.

Cash Receipts

Money received by a business during a given period, from operations, investments, and financing.

After-Tax Cash Flows

The net cash inflows and outflows of a project or investment after accounting for income taxes.

Pre-Tax Cash Flows

The amount of cash generated by a company's operations before considering the impact of income taxes.