Which of the Following Statements Is True of Accrual Basis

question 91

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:

Physical Flow

The movement of physical goods or materials within a production process or supply chain.

Ending Inventory

The total value of all the goods available for sale at the end of an accounting period.

Average Unit Cost

The cost incurred for producing a single unit, calculated by dividing the total cost of production by the number of units produced.

Units

A measure of quantity representing the amount of product or service.