Which of the Following Is a CORRECT Statement About the Two

question 150

Multiple Choice

Which of the following is a CORRECT statement about the two bases of accounting?

• A)Cash-basis accounting records revenues when they are earned.
• B)Cash-basis accounting records expenses only at the end of the month.
• C)GAAP requires accrual accounting.
• D)Only the largest companies in the United States use accrual accounting.

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Definitions:

Initial Margin

The upfront payment required when purchasing securities on margin, serving as a deposit to cover credit risk for the broker.

Maintenance Margin

The minimum account balance that must be maintained by an investor in a margin account after purchasing securities on margin.

Stock-index Futures

Futures contracts that use a stock index as the underlying asset, allowing investors to speculate on the future value of the index.

S&P 500

An index that measures the stock performance of 500 large companies listed on stock exchanges in the United States.