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

Using the cash basis accounting method is not suitable for businesses that extend credit because it only records transactions when cash changes hands, which can misrepresent the financial position of a business that has accounts receivable.

A Small Business Owner Should Not Use the Cash Basis