Which of the following statements is incorrect?
A)The fiscal year is any 12 consecutive months used by a business as its annual accounting period.
B)Property, plant, and equipment are long term assets.
C)Interim financial reports can be based on one-month or three-month accounting periods.
D)An adjusted trial balance shows the account balances after they have been revised to reflect the effects of end-of-period adjustments.
E)The cash basis of accounting is consistent with GAAP.

Question

Which of the following statements is incorrect? 
A)The fiscal year is any 12 consecutive months used by a business as its annual accounting period.
B)Property, plant, and equipment are long term assets.
C)Interim financial reports can be based on one-month or three-month accounting periods.
D)An adjusted trial balance shows the account balances after they have been revised to reflect the effects of end-of-period adjustments.
E)The cash basis of accounting is consistent with GAAP.

Quizplus · Accepted Answer

The cash basis of accounting is not consistent with GAAP (Generally Accepted Accounting Principles), which require accrual basis accounting. Therefore, statement E is incorrect.

Which of the Following Statements Is Incorrect