A small company may be able to justify using a cash-basis of accounting if they have

Question

Quizplus · Accepted Answer

A small company may be able to justify using a cash-basis of accounting if they have few receivables and payables. This is because cash-basis accounting only records transactions when cash is received or paid, and therefore it is easier to manage and track cash flow with fewer transactions. Sales volume, accountant on staff, and all sales and purchases on account are not necessarily factors that determine the suitability of cash-basis accounting.

A Small Company May Be Able to Justify Using a Cash-Basis