Cash-basis accounting is a better representation of the time-period concept and the revenue principle.

Question

Quizplus · Accepted Answer

Cash-basis accounting only records transactions when cash is received or paid out, which can lead to inaccurate representations of the time-period concept and revenue principle. Accrual accounting, on the other hand, recognizes revenue and expenses when they are earned or incurred, regardless of when cash is received or paid out, providing a more accurate representation of financial activity over a given period.

Cash-Basis Accounting Is a Better Representation of the Time-Period Concept