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