Question

GAAP-based financial statements are prepared according to the accrual basis of accounting.(True or False)

Answer 1

GAAP-based financial statements are prepared according to the accrual basis of accounting. Statement is True.

Step-by-step explanation:

True.

GAAP-based financial statements, which stands for Generally Accepted Accounting Principles, are prepared according to the accrual basis of accounting.

This means that transactions are recorded when they occur, regardless of when the cash is received or paid. For example, if a company sells goods on credit, the revenue is recognized at the time of sale, even if the cash is not received until a later date.