Which of the Following Statements Relating to the Cash Basis

question 37

Multiple Choice

Which of the following statements relating to the cash basis of accounting is incorrect?

• A) Income is recorded in the period in which the cash is received.
• B) It is used by small business entities and professionals who conduct most of their business activities in cash.
• C) It is considered to be a suitable method of accounting for governments.
• D) The cost of goods and services consumed in the current period, but not paid for, are recognised as expenses in a later period when cash is paid.

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