Which of the Following Statements About Cash Basis Accounting and Accrual

question 91

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 Unearned Revenue account is increased when a company receives a deposit in advance of services to be performed by the company.

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