Question

______ is the Accounting method that recognizes the impact of transactions on the financial statements in the time periods when cash is disbursed or received.

• A. Cash basis
• B. Hybrid basis
• C. Accrual basis
• D. Double entry basis

Answer 1

The correct option is A Cash basis

There are two methods of accounting on the basis of business transactions are recorded i.e. cash system and accrual system.

If revenue and expense are recorded in the books of account based on the period of occurrence, its called accrual system of accounting irrespective of cash actually paid or not.

If the transactions are recorded in books of account when cash is physically received is known as cash system of accounting irrespective of the period of revenue or expense.