5 Questions on Cash Accounting

Let's see how well you understand the Cash Method of Accounting. Try to answer these five questions.

1. The Cash Method is commonly used for personal finances. True or False?
2. When Cash Accounting, Revenue is only recorded when Cash is received. True or False?
3. The Cash Method is ideal for businesses with Inventory. True or False?
4. When Cash Accounting, Expenses are recorded when they are billed. True or False?
5. The Cash Method is simpler to implement than the Accrual Method. True or False?

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[AccountingStuff]

How many did you get right?

ANSWERS ⬇️

1. TRUE - The Cash Method is commonly used for personal finances. This is because it's straightforward and intuitive.
2. TRUE - In Cash Accounting, Revenue is only recorded when Cash is received from customers. This method doesn't recognize Accounts Receivable. So sales are only recorded when payments are received, not when they are made on credit.
3. FALSE - The Cash Method is not ideal for businesses with Inventory. This is because it doesn't apply the Matching Principle. This makes it difficult to measure profit accurately over time.
4. FALSE - In Cash Accounting, Expenses are recorded only when Cash is paid out, not when they are billed.
5. TRUE - The Cash Method is simpler to implement than the Accrual Method. This is because it involves fewer accounting entries. Transactions are recorded only when Cash is received or paid out.

Head to accountingstuff.com for more practice questions like this.

[andrikflores]

Make more short test's like this 🎉

[rexdev]

All is correct, even tho i didn't learn cash method that much (bcuz my college more focused in accrual method)

[MS-htmj]

Very informative thank you
Can you recommend some books and resources to know strategy of maintaining cash flow better
And please make content on deep analysis and management of cash flow of company

[callmemjt]

They could’ve had JSN lol if that were the case they would’ve been way more dominant this year