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
Correct Answer: Option A
A. Accruals and prepayments are considered
Explanation
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.
