Question

Which of the following are in accordance with IFRS? Cash basis accounting Both accrual basis and cash basis accounting Neither accrual basis nor cash basis accounting Accrual basis accounting

Answer 1

Answer:

Accrual basis accounting

Explanation:

Under Accrual basis of accounting, income is recognized when it is earned and not when actual cash is paid or received.

Under cash basis of accounting, income is only recognized when actual cash is received.

Accrual basis of accounting ensures transactions pertaining to a period are recorded in that period and  it depicts more accurate financial picture unlike in cash accounting wherein income for a period might be overstated or understated.

Following cash basis of accounting is not in accord with both US GAAPs (generally accepted accounting principles) and IFRS.

Answer 2

The one that is in accordance with IFRS? is Accrual basis accounting

• Accrual accounting is referred to as revenue and expenses which are known and recorded when they takes place or occured.

This method is used mostly by publicly-traded companies as it smooths out earnings in course of time..The accrual basis of accounting is stood for under both generally accepted accounting principles (GAAP) and international financial reporting standards (IFRS).

Conclusively, Cash basis accounting is not stood for under the generally Acceptable Accounting Principles (GAAP) or the International Financial Reporting Standards (IFRS).

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