Cash-basis accounting is a more faithful representation of economic reality than accrual accounting.

Name: Cash-basis accounting is a more faithful representation of economic reality than accrual accounting.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Accrual accounting provides a more accurate representation of a company's financial position by recognizing revenues and expenses when they are incurred, regardless of when cash transactions occur, thus reflecting the true economic activities.

Cash-Basis Accounting Is a More Faithful Representation of Economic Reality