The cash basis method of accounting can be best described as:
A) The recording of transactions and adjustments so that debits equal credits.
B) The method that equates assets with liabilities and owners' equity.
C) The method that recognizes revenue when money is received and expenses when money is paid.
D) The method that matches incurred expenses with related revenues when they are earned.

Question

Quizplus · Accepted Answer

The cash basis method of accounting recognizes revenue when money is received and expenses when money is paid. It does not take into account accruals or deferred payments, but focuses solely on the actual cash transactions. This method is often used by small businesses or individuals who do not have complex transactions and do not need to adhere to Generally Accepted Accounting Principles (GAAP).

The Cash Basis Method of Accounting Can Be Best Described