Under cash-basis accounting, the timing of cash inflows and outflows exactly matches the reporting of revenues and expenses in the income statement.

Question

Business

Julian Prince

28 January, 22:29

Under cash-basis accounting, the timing of cash inflows and outflows exactly matches the reporting of revenues and expenses in the income statement.

+4

Answers (1)

Know the Answer?

Michelle Lowe · Answer 1

The statement is correct as well as true

Explanation:

In the cash basis of accounting, is the one of the methods or way of recording the accounting transactions for expenses as well as revenue only, when the corresponding cash is collected or received or payments are made.

Whereas the revenues will be recorded only when the customer pay for the billed service or the product and also record the payable when it is paid by the company.

Therefore, in the cash flows accounting, the timing of recording the inflows and the outflows of the cash matches the reporting of the expenses and revenues in the income statement.