Which of the Following Statements Is TRUE of Accrual Basis

question 170

Multiple Choice

Which of the following statements is TRUE of accrual basis accounting?

• A) Accrual basis accounting is required by Generally Accepted Accounting Principles (GAAP).
• B) Accrual basis accounting records expenses only when cash has been paid for them.
• C) Accrual basis accounting records revenue only when cash is received.
• D) Accrual basis accounting always results in greater net income than cash basis accounting.

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Definitions:

Delivery Expense

Costs incurred by a company to transport its products to customers, including freight, shipping, and handling fees.

Trade Discounts

Reductions in the listed price of goods or services offered to customers, usually based on volume purchased or early payment.

Customer Discount

A reduction in the price offered to customers, often as an incentive for early payment or as part of promotional efforts.

Sales Tax

A tax imposed by governments on the sale of goods and services, collected by the retailer at the point of purchase.