Which of the following is a CORRECT statement about the two bases of accounting?

Question

Quizplus · Accepted Answer

GAAP (Generally Accepted Accounting Principles) requires the use of accrual accounting, which records revenues when they are earned and expenses when they are incurred, regardless of when cash is received or paid. Cash-basis accounting records revenues and expenses only when cash is received or paid, which can result in inaccurate financial statements. Option A is incorrect because cash-basis accounting records revenues when cash is received, not when they are earned. Option B is incorrect because cash-basis accounting records expenses when cash is paid, not at the end of the month. Option D is incorrect because companies of all sizes can use either cash-basis or accrual accounting, depending on their business needs and GAAP requirements.

Which of the Following Is a CORRECT Statement About the Two