Which of the Following Statements About the Cash Method of Accounting

question 81

Multiple Choice

Which of the following statements about the cash method of accounting is false?

• A)Under the cash method,annual taxable income equals annual net cash inflow.
• B)The revenue from a sale of goods is recognized when payment is received.
• C)An expense is recognized when the expense is paid.
• D)None of the above is false.

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Definitions:

Journal Entry

A record in accounting that notes the debit and credit transactions affecting the financial statements of a business.

Significant Influence

A concept in accounting and finance where an investor has the power to participate in, but not control, the financial and operating policy decisions of an investee.

Investment Account

A financial account that holds securities, shares, or other investments made by an individual or entity with the objective of earning returns.

Net Income

The ultimate earnings of a company after all deductions, including expenses and taxes, from revenue.