Some Events Are NOT Recorded in the Accounting Information System

question 5

Multiple Choice

Some events are NOT recorded in the accounting information system because

• A) the service has been provided but the cash has not yet been received.
• B) the service has not been provided but the cash has already been received.
• C) their measurement is too complex.
• D) the amounts are not material.

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Definitions:

Cash Collection

The process of gathering and processing payments received from customers.

Prior Year

Prior year refers to the last completed fiscal or calendar year used as a reference point in financial and operational analysis.

Current GAAP

The most up-to-date set of Generally Accepted Accounting Principles that companies are required to follow when preparing financial statements.

Direct Method

A cash flow statement preparation approach that lists major categories of gross cash receipts and payments.