Question

In accounting basis of ascertaining profit or loss. 1)cash basis 2) accrual basis 3) either cash or accrual basis 4) none of the above ​

Answer 1

Answer:

accrual basis

Explanation:

because it consist of both cash and credit transactions.

Answer 2

In accounting basis of ascertaining profit or loss is based on 2)accrual basis

Definition of Accrual basis:-

Accrual basis is a "method of accounting" followed by the entrepreneurs generally, as it is based on the "matching concept", revenues and expenses are recorded in the books of accounts "when the transactions are done" not when the cash inflows or outflows.

Characteristics of Accrual Accounting are:-

• The accrual method gives a real-time effect on the financial position of the firm.

• Unlike, cash accounting, in which the transactions are recorded only when the cash is received or given, it is preferable for the small business.

• In accrual accounting, the effect of the transaction is made immediately which shows the real financial position if a sale is made, regardless of cash received or not the transaction of sale will get passed in books.

So, the preferable accounting method for most business is the accrual method.