Which of the Following Statements Are Correct? for Accrual-Basis Accounting

question 105

Multiple Choice

Which of the following statements are correct? For accrual-basis accounting:
(1) record revenues when earned.(2) record expenses when cash is paid.For cash-basis accounting:
(3) record revenue when cash is received.(4) record expenses when benefit is received.

• A)(1)and (4).
• B)(2)and (3).
• C)(1)and (3).

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Definitions:

Wages Increase

An upward adjustment in the amount of compensation workers receive for their labor, influencing purchasing power and cost of living.

Labor Supplied

The total hours that workers are willing to work at a given wage rate, within a specified period.

Social Security

A government program that provides financial assistance to individuals during retirement, disability, or upon the death of a primary wage earner.

Supply of Labor

The total hours that workers wish to work at a given wage rate, influenced by factors like wages, working conditions, and demographics.