Question

Which of the following statements is incorrect?

a) Accrual basis accounting can more accurately provide information about forecasting profit and loss during a specific time period.
b) Cash basis accounting records payments to vendors at the time point when the check is written.
c) Cash basis accounting should be chosen over Accrual basis accounting when a business wishes to accurately track income and expenses at the time they happen.
d) All statements are correct.

Answer 1

The incorrect statement is option c) Cash basis accounting should be chosen over Accrual basis accounting when a business wishes to accurately track income and expenses at the time they happen.

Step-by-step explanation:

The incorrect statement is option c) Cash basis accounting should be chosen over Accrual basis accounting when a business wishes to accurately track income and expenses at the time they happen.

Cash basis accounting records income and expenses when cash is received or paid, regardless of when the transaction occurred. It does not track income and expenses as they happen but rather when cash is involved. On the other hand, Accrual basis accounting records income and expenses when they are incurred, regardless of when cash is received or paid. This method provides more accurate information about forecasting profit and loss during a specific time period, making option a) correct.

Therefore, option c) is incorrect and the correct answer is that not all statements are correct.