Practice Question 10

Which statement is correct?

(A) The use of the cash-basis of accounting violates both the revenue recognition and expense recognition principles.

(B) As long as management is ethical, there are no problems with using the cash-basis of accounting.

(C) As long as a company consistently uses the cash-basis of accounting, generally accepted accounting principles allow its use.

(D) The cash-basis of accounting is objective because no one can be certain of the amount of revenue until the cash is received.