Cash Accounting Practice Quiz

February 13, 2024 James Hearle

Cash Accounting Practice Questions

Challenge yourself with these 5 True or False questions on Cash Accounting. Can you get them all correct?

The Cash Method of Accounting is commonly used for personal finances.
a) True
b) False
When Cash Accounting, Revenue is only recorded when Cash is received.
a) True
b) False
The Cash Method of Accounting is ideal for businesses with Inventory.
a) True
b) False
When Cash Accounting, Expenses are recorded when they are billed.
a) True
b) False
The Cash Method of Accounting is simpler to implement than the Accrual Method.
a) True
b) False

Scroll down to see the answers.

This Cash Method quiz is also available in this video:

Here are the answers:

a) True. The Cash Method is commonly used for personal finances. This is because it's straightforward and intuitive.
a) True. In Cash Accounting, Revenue is only recorded when Cash is received from customers. This method doesn't recognize Accounts Receivable. So sales are only recorded when payments are received, not when they are made on credit.
b) False. The Cash Method is not ideal for businesses with Inventory. This is because it doesn't apply the Matching Principle. This makes it difficult to measure profit accurately over time.
b) False. In Cash Accounting, Expenses are recorded only when Cash is paid out, not when they are billed.
a) True. The Cash Method is simpler to implement than the Accrual Method. This is because it involves fewer accounting entries. Transactions are recorded only when Cash is received or paid out.

Got your score? Tell us in the comments below!

Want more practice? My Cash vs Accrual Accounting Question pack has 20 additional questions and answers. Download it here to try them out.

Get my Cash vs Accrual Accounting Cheat Sheet here. This quick guide has all of the important facts you need.