The Accrual Basis of Accounting

question 208

Multiple Choice

The accrual basis of accounting:

• A)Is generally accepted for external reporting since it is more useful for most business decisions.
• B)Is flawed because it gives complete information about cash flows.
• C)Recognizes revenues when received in cash.
• D)Recognizes expenses when paid in cash.
• E)Eliminates the need for adjusting entries at the end of each period.

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Definitions:

Manufacturers

Companies or entities that make goods through a process involving raw materials, components, or assemblies, usually on a large scale.

Organizational Buyers

Entities such as companies, governments, and institutions that purchase goods or services for purposes other than personal consumption, often involving more complex processes and larger transactions than individual consumers.

Manufacturers

Companies or individuals that produce finished goods from raw materials through the use of various processes.

Government Agencies

Organizations established by a government to implement policy, enforce laws, and oversee specific areas of public administration.