Question

__________ system records only actual cash receipts and payments.

• A. Cash
• B. Accrual
• C. Mercantile
• D. Single entry

Answer 1

The correct option is A Cash

There are two method of accounting i.e. cash system of accounting and accrual system of accounting.

Cash system of accounting is normally followed by the professionals in which revenue and expenses are recorded on the basis of cash payment or receipt irrespective of their accrual timings.

Accrual system of accounting is the method of accounting where expenses and incomes are recorded in books of account on their accruals irrespective of their payment status.