Question

Is cash basis accounting allowed under GAAP?

Answer 1

No, cash basis accounting is not allowed under GAAP as it follows an accrual basis of accounting. However, for small businesses it is not mandatory to follow GAAP. Therefore, they can follow the cash basis of accounting.

Also read:

• Difference Between GAAP and IFRS
• Difference Between IFRS and IND AS
• MCQs on GAAP
• Difference Between Cash Basis and Accrual Basis of Accounting

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