Cash-basis accounting provides the most useful measure of future operating performance.

Question

Quizplus · Accepted Answer

Cash-basis accounting only records transactions when cash is received or paid out. This can be misleading because it does not take into account future obligations or revenue that has been earned but not received yet. Accrual-basis accounting provides a more accurate picture of future operating performance by recognizing revenue and expenses when they are earned or incurred, regardless of when cash is received or paid out.

Cash-Basis Accounting Provides the Most Useful Measure of Future Operating