The Cash Basis of Accounting, as a Basis for Measuring

question 105

Multiple Choice

The cash basis of accounting, as a basis for measuring performance for a particular accounting period, has/have which of the following weakness(es) ?

• A)does not adequately match the cost of the efforts required to generate inflows with the inflows themselves
• B)separates the recognition of revenue from the process of earning those revenues.
• C)sensitive to the timing of cash expenditures
• D)all of the above
• E)none of the above

---

Definitions:

Expected Rate Of Profit

The anticipated return on an investment, considering potential risks and rewards.

Recessions

Periods of economic decline lasting more than a few months, typically visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

Government Spending

Expenditures by the government sector including spending on goods and services, public works, social services, and transfer payments.

Classical Economists

Economists of the 18th and 19th centuries who believed in free markets, minimal government intervention, and the self-regulating nature of economies.