Which of the Following Is NOT True Regarding Accrual-Basis Accounting

question 19

Multiple Choice

Which of the following is NOT true regarding accrual-basis accounting?

• A) A company records events that change its financial statements in the periods in which the events occur.
• B) Revenues and expenses are recognized in the periods in which the company receives or pays cash.
• C) It has greater potential to depict meaningful trends in revenues and expenses.
• D) Revenues and expenses can be more easily related to the economic environment of the period in which they occurred.

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Definitions:

General Ledger Accounts

Individual accounts in the general ledger that record all transactions of a company, used to prepare financial statements.

Liquidity

The simplicity of turning an asset into cash without impacting its market value.

Long-Term Investments

Assets that a company intends to hold for more than one year, including stocks, bonds, real estate, and other financial investments.

Long-Term Debt

Debt obligations that are due more than one year into the future, often used to finance or expand operations.