Which of the Following Regarding Accrual Versus Cash-Basis Accounting Is

question 41

Multiple Choice

Which of the following regarding accrual versus cash-basis accounting is true?

• A) The FASB believes that the cash basis is appropriate for some smaller companies,especially those in the service industry.
• B) The cash basis is less useful in predicting the timing and amounts of future cash flows of an enterprise.
• C) Application of the cash basis results in an income statement reporting only revenues.
• D) The cash basis requires a complete set of double-entry records.

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Definitions:

Marginal Product

The increase in output that is produced by adding one more unit of a particular input while holding all other inputs constant.

Total Output

The complete amount of goods or services produced by an economy, sector, or organization over a certain period.

Least Skilled Worker

An employee who possesses the minimal skills required for a job, often receiving the lowest wages.

MP

Represents marginal productivity, which is the additional output derived from the use of one more unit of a variable input, holding all other inputs constant.