The basis that reflects a transaction's economic impact, regardless of whether cash is involved, is the
A) revenue recognition basis of accounting.
B) cash basis of accounting.
C) tax basis of accounting.
D) fair value basis of accounting.
E) accrual basis of accounting.

Question

Quizplus · Accepted Answer

The accrual basis of accounting reflects a transaction's economic impact when it occurs, regardless of when cash is exchanged. This approach recognizes revenues when earned and expenses when incurred, providing a more accurate picture of a company's financial position than the cash basis of accounting.

The Basis That Reflects a Transaction's Economic Impact, Regardless of Whether