The persistence of operating income as compared to cash flows from operations is consistent with GAAP requiring the use of __________ accounting for financial reporting purposes.
A) cash-basis
B) accrual-basis
C) tax-basis
D) cost-basis

Question

Quizplus · Accepted Answer

The persistence of operating income as compared to cash flows from operations is consistent with GAAP (Generally Accepted Accounting Principles) requiring the use of accrual-basis accounting for financial reporting purposes. Accrual accounting records income and expenses when they are earned or incurred, regardless of when cash is exchanged, providing a more accurate picture of a company's financial health than cash-basis accounting.

The Persistence of Operating Income as Compared to Cash Flows