Which of the Following Statements in Relation to Converting Accrual

question 29

Multiple Choice

Which of the following statements in relation to converting accrual information to the cash basis is correct?

• A) An increase in current assets means less cash.
• B) A decrease in current assets means less cash.
• C) An increase in current liabilities means less expense.
• D) A decrease in current liabilities means more cash.

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Definitions:

Gross Income

The total revenue generated from a business's activities before any expenses or taxes are deducted.

Disposable Income

The sum of money families can use for expenditures and savings once income taxes are deducted.

Necessities

Fundamental needs required for sustaining human life, such as food, water, shelter, and clothing.

Economic Activity

Any action that involves the production, distribution, and consumption of goods and services at all levels within a society.