Ask Question
14 August, 10:30

Hahn Co. prepared financial statements on the cash basis of accounting. The cash basis was modified so that an accrual of income taxes was reported. Are these financial statements in accordance with the modified cash basis of accounting

A. Yes.

B. No, because the modifications are illogical.

C. No, because there is no substantial support for recording income taxes.

D. No, because the modifications result in financial statements equivalent to those prepared under the accrual basis of accounting.

+1
Answers (1)
  1. 14 August, 11:23
    0
    Answer: the answer is A. Yes.

    Explanation:

    Under a strict cash basis of accounting, revenues and expenses are recorded only when cash is received or paid. Under a modified cash basis of accounting, certain accruals and/or deferrals are recorded for financial-statement purposes.

    The most common modifications are the capitalization and amortization of long-lived assets and the accrual for income taxes (recognition of income tax expense and related liability).
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Hahn Co. prepared financial statements on the cash basis of accounting. The cash basis was modified so that an accrual of income taxes was ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers