Which statement is correct?
A) The statement of comprehensive income and the balance sheet are accrual based and the cash flow statement is cash based.
B) The balance sheet is accrual based and the income and cash flow statements are cash based.
C) The statement of comprehensive income, balance sheet and cash flow statement are all accrual based.
D) None of the statements is correct.

Question

Quizplus · Accepted Answer

The statement of comprehensive income and the balance sheet are prepared on an accrual basis, which means they account for transactions and events as they occur, regardless of whether cash has been exchanged. The cash flow statement, on the other hand, is prepared on a cash basis, meaning it only accounts for cash received and paid out during the period.

Which Statement Is Correct