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1. What are the two fundamental characteristics of all financial transaction?
Taxes and source of funds.
Amount and timing.
Amount and source of funds.
2. What is the primary difference between cash basis of accounting and accrual basis of accounting?
The profit calculation.
The way that the date of a transaction is determined.
Cash basis accounting does not require any financial reports.
3. Why do many companies choose accrual basis accounting instead of cash basis?
Accrual basis is easier to use than cash basis.
Accrual basis creates a closer match of costs and benefits within a time period which leads to a truer profitability calculation.
Accrual basis allows the company to delay payments to suppliers.
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