Which is correct?
A)The income statement,the balance sheet and the statement of cash flows are all cash based
B)The income statement and the statement of cash flows are cash based and the balance sheet is accrual based
C)The income statement and the balance sheet are accrual based and the statement of cash flows is cash based
D)The income statement,the balance sheet and the statement of cash flows are all accrual based

Question

Quizplus · Accepted Answer

The income statement and the balance sheet are based on accrual accounting, which records revenue and expenses when they are earned or incurred, regardless of when actual cash is received or paid. The statement of cash flows, on the other hand, is based on cash accounting, which tracks actual inflows and outflows of cash.

Which Is Correct