The Basic Defect of Cash-Basis Accounting Is That the Cash

question 161

True/False

The basic defect of cash-basis accounting is that the cash basis ignores important information.

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Definitions:

Receivables

Financial obligations of customers to a company for merchandise or services already supplied or consumed, but for which payment is still outstanding.

Taxes

Mandatory financial charges or levies imposed by a government on individuals, corporations, and other entities to fund government spending and various public expenditures.

Minimum Cash Balance

The least amount of cash a company maintains on hand to meet immediate operational expenses.

Net Cash Flow

The overall flow of currency into and out of an enterprise, critically influencing its liquid assets.