Which of the following statements does not properly describe the accrual basis of accounting?
A) Expenses are recognized when incurred regardless of the timing of cash flows.
B) Revenues are recognized when earned regardless of the timing of cash flows.
C)Generally accepted accounting principles require use of the accrual basis.
D)It should not be used when providing financial statements to external decision makers.

Question

Quizplus · Accepted Answer

The statement that the accrual basis of accounting should not be used when providing financial statements to external decision makers is not correct. In fact, the accrual basis is the preferred method of accounting for financial reporting purposes and is mandated by generally accepted accounting principles (GAAP) in many cases. Therefore, option D is the correct answer.

Which of the Following Statements Does Not Properly Describe the Accrual