Income will always be greater under the cash basis of accounting than under the accrual basis of accounting.

Question

Quizplus · Accepted Answer

This statement is false. Income can be higher or lower under the cash basis compared to accrual basis, depending on when cash is received or expenses are paid. The cash basis only records income and expenses when cash is received or paid, while the accrual basis records income and expenses when they are earned or incurred, regardless of when cash is received or paid. Therefore, the timing of cash inflows and outflows can affect the amount of income reported under each method.

Income Will Always Be Greater Under the Cash Basis of Accounting