The Method of Accounting That Records Revenues ONLY When Cash

question 147

Multiple Choice

The method of accounting that records revenues ONLY when cash is received is the:

• A)deferral method.
• B)cash-basis method.
• C)accrual-basis method.
• D)hybrid method.

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Definitions:

Coupon Rate

A bond’s interest payments per dollar of par value.

Expected Rate of Inflation

An estimate of the rate at which the general level of prices for goods and services will rise over a period.

Annual Real Rate

The annual rate of return on an investment, adjusted for inflation, indicating the real increase in the value of the investment over a year.

Inflation Rate

The pace at which prices for goods and services increase, leading to a decrease in purchasing power.