Why Would the Accrual Basis of Accounting Be Preferable to the Cash

question 17

Multiple Choice

Why would the accrual basis of accounting be preferable to the cash basis?

• A)it is easier to keep records on the accrual basis than on the cash basis
• B)it measures performance by comparing inflows and outflows of cash
• C)it ignores the effect of the consumption of assets on the cost of doing business
• D)it measures performance by comparing revenues earned with expenses incurred.

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Definitions:

Confirmation Bias

An inclination to look for, comprehend, prioritize, and bring to mind details in a way that affirms someone's preconceived notions or assumptions.

Premonitions

A feeling or intuition of a future event, especially one of significant importance, without a rational basis.

Independent Variable

An independent variable is a variable that is manipulated or changed in an experiment to test its effects on dependent variables.

Drinking Coffee

The act of consuming coffee, a brewed beverage prepared from roasted coffee beans, often praised for its stimulant effects due to caffeine.