Which of the Following Statements About the Cash Basis of Accounting

Multiple Choice

Which of the following statements about the cash basis of accounting is correct?

A) It can lead to a distorted view of the company's financial performance.
B) It is the only acceptable method for external reporting.
C) It reports revenues when earned and expenses when incurred.
D) It is used when cash is paid at the same time as the cost is incurred, but is not used when cash is paid before the expense is incurred.