Which of the Following Does Not Correctly Describe the Cash

question 30

Multiple Choice

Which of the following does not correctly describe the cash basis of accounting?

• A)It is not accepted for external reporting purposes.
• B)Revenues are recognized when cash is collected from customers.
• C)Expenses are recognized when they are paid for.
• D)Cash payments for long-term assets are recognized as an expense at the time of payment.

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Definitions:

Comprehensive Income

The change in equity of a company during a period from transactions and other events from non-owner sources.

Equity

The portion of a company's assets that belongs to the shareholders after debts and liabilities have been settled.

Non-Owner Sources

Non-Owner Sources refer to funds sourced from entities other than the owners, such as loans, creditor financing, or any external investments into the business.

Accounting Principle

Fundamental guidelines or rules that underpin the accounting practices and financial reporting standards.