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 .
the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles .
cash must be received before revenue is recognized .
events that change a company ’ s financial statements are recognized in the period they occur rather than in the period in which cash is paid or received .
Multiple Choice Question 165 Expenses paid and recorded as assets before they are used are called accrued expenses . interim expenses . prepaid expenses .