Which of the following is(are)a deficiency(deficiencies)of cash-basis accounting?
A) it omits key revenues and expenses from the balance sheet
B) it fails to match revenues and expenses to measure economic performance
C) it omits key assets and key liabilities from the balance sheet
D) B and C

Question

Quizplus · Accepted Answer

Cash-basis accounting only records transactions when cash is exchanged, resulting in a failure to match revenues and expenses accurately to measure the economic performance of a company. This omission can lead to an inaccurate reflection of a company's financial position. Key assets and liabilities may also be omitted from the balance sheet, further hindering the accuracy of financial reporting.

Which of the Following Is(are)a Deficiency(deficiencies)of Cash-Basis Accounting