Question

Under the cash basis of accounting: a. a promise to pay is sufficient to recognize revenue. b. cash must be received before revenue is recognized. c. expenses are matched with the revenue that is produced. d. revenue is recognized when services are performed.

Answer 1

The correct answer is letter "B": cash must be received before revenue is recognized.

Step-by-step explanation:

Cash Basis Accounting considers revenues and expenditures when the cash is paid or received. It differs from the other major accounting method known as accrual accounting that records income or expenditures in the books of the company when the revenue is earned but not collected.