Question

Under cash-basis accounting, companies typically report expenses: a. In the same period in which an asset is purchased. b. In the same period in which cash is paid. c. In the same period as the revenue they help to generate. d. In the same period in which a divided is paid.

Answer 1

Answer:

b. In the same period in which cash is paid.

Explanation:

Under the accrual basis, expenses are recognized in the period incurred and revenue are recognized in the period earned.

However, under the cash basis accounting, expenses are recognized when cash is paid, revenue when cash is received.

Hence the right option is  b. In the same period in which cash is paid.