Which of the Following Must Use the Accrual Method of Accounting

question 20

Multiple Choice

Which of the following must use the accrual method of accounting?

• A) All of the above must use the accrual method.
• B) None of the above must use the accrual method.
• C) Only I and II must use the accrual method.
• D) Only I and III must use the accrual method.
• E) Only III must use the accrual method.

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Definitions:

Net Fixed Assets

The value of a company's property, plant, and equipment minus any accumulated depreciation, representing long-term investments in the business.

Sales

The exchange of goods or services for money; also refers to the function or department within a business that handles this activity.

Times Interest Earned Ratio

A financial metric that measures a company's ability to meet its debt obligations based on its current income.

Operating Income

The profit realized from a business's operations, after deducting operating expenses like wages and cost of goods sold, but before interest and taxes.