Question

The basis of accounting used by not-for-profit organizations in their external financial reports is

Answer 1

Answer:

The correct answer here is A) industry specific basis of accounting.

Explanation:

The term nonprofit accounting means a unique way of recording and reporting the business transactions which are taken up by the nonprofit organizations. There are various basis of accounting, which a non for profit organization can use like cash basis ( where income and expenses are recognized when they occurred  , and this type of accounting is more suitable for smaller nonprofits organizations ) , accrual basis ( where income and expenses are recorded when they are earned not received ) , modified cash basis ( is a mixture of both cash and accrual basis of accounting ). But when a not for profit organization is preparing their external financial report, the basis of accounting would be industry specific.