Under cash-basis accounting,income statements and balance sheets are misstated.

Question

Quizplus · Accepted Answer

Cash-basis accounting only records transactions when cash is received or paid, which can result in income statements and balance sheets that do not accurately reflect the financial position and performance of a business. Accrual accounting, on the other hand, records transactions when they occur, providing a more accurate picture of a business's financial health.

Under Cash-Basis Accounting,income Statements and Balance Sheets Are Misstated