A small business owner should not use the cash basis if ______.
A) the business extends credit
B) the business has high debt
C) the business has low sales
D) the business has increasing expenses

Question

Quizplus · Accepted Answer

The cash basis of accounting records revenues when cash is received and expenses when they are paid. This method does not accurately reflect the financial position of a business that extends credit to customers because it does not account for accounts receivable or payable.

A Small Business Owner Should Not Use the Cash Basis