Which of the following relates to cash basis of accounting?
Accruals and prepayments are considered
Debtors and creditors are recorded
Fixed assets are written off in the year of purchase
Profits are maximized
Explanation
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Which of the following relates to cash basis of accounting?
A. Accruals and prepayments are considered
B. Debtors and creditors are recorded
C. Fixed assets are written off in the year of purchase
D. Profits are maximized
The correct ANSWER is "C" Fixed assets are written off in the of purchase. If someone choose option A to be answer, it means accruals and prepayments are recognized in cash basis accounting, whereas, cash basis of accounting doesn't record accruals and prepayments.
Reference Simplified and Amplified Bookkeeping and Accounting for Senior Secondary schools 1,2&3. By Femi Longe.
Please check up the reference and make necessary correct to the question on your website and app, so to avoid misleading information.
