Question

which examples are advantages of accrual basis accounting? select two correct answers. ☐ it is good at tracking cash flow. ☐ it records transactions only when cash changes hands. ☐ it allows a business to track money that is owed but not yet paid. ☐ it meets gaap standards. ☐ it means a business doesnt have to use receipts or invoices.

Explanation:

1. Analyze "It is good at tracking cash flow": Cash basis is better for cash flow tracking, so this is incorrect.
2. Analyze "It records transactions only when cash changes hands": This describes cash basis, not accrual, so incorrect.
3. Analyze "It allows a business to track money that is owed but not yet paid": Accrual records revenues/expenses when earned/incurred, so it tracks payables/receivables, this is correct.
4. Analyze "It meets GAAP standards": Accrual accounting is required by GAAP for most businesses, this is correct.
5. Analyze "It means a business doesn't have to use receipts or invoices": Accrual still needs documentation for transactions, so incorrect.

Answer:

C. It allows a business to track money that is owed but not yet paid.
D. It meets GAAP standards.