Question on: WAEC Accounting - 2015
Which of the following relates to cash basis of accounting?
A
Accruals and prepayments are considered
B
Debtors and creditors are recorded
C
Fixed assets are written off in the year of purchase
D
Profits are maximized
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Correct Option: A
The cash basis is a method of recording accounting transactions for revenue and expenses only when the corresponding cash is received or payments are made. Thus, you record revenue only when a customer pays for a billed product or service, and you record a payable only when it is paid by the company.
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