Nathan reports profits when cash is received and expenses when they are paid.He is using:

Question

Quizplus · Accepted Answer

Nathan is using cash-basis accounting, which recognizes transactions only when cash is received or paid, regardless of when the transaction was initiated or completed. This method is simpler than accrual-basis accounting, which recognizes revenues and expenses when they are earned or incurred, regardless of when cash is exchanged. A statement of cash flows is a financial statement that summarizes cash inflows and outflows over a specific period of time, but it is not an accounting method. Liquid assets are assets that can easily be converted to cash, such as stocks or bonds, but this term is not applicable in this scenario.

Nathan Reports Profits When Cash Is Received and Expenses When