Which Transaction Would Not Be Recorded Under Cash-Basis Accounting

question 50

Multiple Choice

Which transaction would not be recorded under cash-basis accounting?

• A) Providing services to customers for cash.
• B) Purchasing one year of rent in advance.
• C) Paying salaries to employees.
• D) Purchasing supplies on account.

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Definitions:

Discount Rate

This term is used in various contexts but generally refers to the interest rate used in discounted cash flow analysis to determine the present value of future cash flows.

Present Value

The present worth of a future total amount of money or series of cash inflow, based on a particular return rate.

Lump Sum

A single payment made at a particular time, as opposed to multiple payments made over time.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.