• Paid $1,625 cash in salaries
• Purchased airline tickets for $250 in December for a trip to take
place in 2014
What is Crue’s 2013 net income using cash basis accounting?
$375.
$4,875.
$4,625.
$125.
Multiple Choice Question 64
Which statement is correct?
The cash basis of accounting is objective because no one can be
certain of the amount of revenue until the cash is received.
As long as management is ethical, there are no problems with using
the cash basis of accounting.
As long as a company consistently uses the cash basis of accounting,
generally accepted accounting principles allow its use.
The use of the cash basis of accounting violates both the revenue
recognition and expense recognition principles.
Multiple Choice Question 61
Under accrual-basis accounting
net income is calculated by matching cash outflows against cash
inflows.