Which of the Following Statements About Cash Basis Accounting and Accrual

question 66

Multiple Choice

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

• A) Using the accrual basis of accounting, if payment is received before delivery of goods or a service, revenue is recorded at the time the payment is received.
• B) Using the accrual basis of accounting, if payment is received after delivery of goods or a service, an asset is recorded at the time the good or service was delivered.
• C) Using the cash basis of accounting, if payment is received before delivery of goods or a service, net income is affected when goods or services are delivered.
• D) Using the cash basis, if payment is received after delivery of goods or a service, unearned revenue is recorded.

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Definitions:

Necessary

In legal and ethical contexts, necessary refers to something that is required or indispensable to achieve a specific outcome or obligation.

Disaffirm

The legal act of renouncing or rejecting a contract or agreement, especially by a party who was not legally competent to enter it at the time of agreement.

Reasonable Value

The fair or market value of goods or services, as determined by considering the costs, demand, and any other factor relevant to an exchange.

Necessary

In legal and philosophical terms, necessary refers to something required, indispensable, or absolutely needed to achieve a certain outcome or fulfill a condition.