Final answer:
False. Under the cash method, payments cannot be made with borrowed funds.
Step-by-step explanation:
False.Under the cash method, payments are recorded when the cash is received or paid out. Borrowed funds are not considered as cash on hand and therefore cannot be used to make payments under the cash method. The cash method focuses on the actual movement of cash, while borrowed funds are considered liabilities that need to be repaid.
For example, if a business borrows $1,000 from a bank, this amount would not be considered as cash for the purpose of the cash method. Instead, the loan would be recorded as a liability, and the payments made to repay the loan would be recorded as expenses when they are actually paid out.