The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called:
A) Accrual basis accounting.
B) Operating cycle accounting.
C) Cash basis accounting.
D) Revenue recognition accounting.
E) Current basis accounting.

Question

Quizplus · Accepted Answer

The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called cash basis accounting. This method does not take into consideration when the transaction actually occurred, but only records it when cash changes hands.

The System of Preparing Financial Statements Based on Recognizing Revenues