Question

The primary difference between the accrual basis and the cash basis of accounting is: (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) ✓ The accrual basis records revenues when services or products are delivered and records expenses when cash is paid The pocrual basis records revenues when services or products are delivered and records expenses when incurred. The cash basis records revenues when services or products are delivered and records expenses when paid The cash bases records revenues when cash is received and records expenses when cash is paid

Answer 1

Under the cash basis, entries in the book of accounts are made when cash is received or paid and not when the receipt or payment becomes due.

whereas

Under the accrual basis, however, revenues and costs are recognised in the period in which they occur rather when they are paid.

Thus, under this system, the monitory effect of a transaction is taken into account in the period in which they are earned rather than in the period in which cash is actually received or paid by the enterprise. This is a more appropriate basis for the calculation of profits as expenses are matched against revenue earned in relation thereto. For example, raw material consumed are matched against the cost of goods sold.

from the above points we can come to a conclusion that the correct answer for this question is

option 2 and 4