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Assets such as inventory and equipment, as well as liabilities such as accounts payable, are absent...

Assets such as inventory and equipment, as well as liabilities such as accounts payable, are absent from a cash basis balance sheet. (True or False)

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Answer #1

Under cash basis accounting, everything is recorded when there is an impact in cash. For example revenues are recorded when cash is received and expenses are recorded when cash is paid. So under this method, the balance sheet doesn't includes inventory, fixed assets, accounts payable.

So the assets such as inventory and equipment, as well as liabilities such as accounts payable are absent from a cash basis balance sheet.

Hence, the given statement is true.

SUMMARY:

The given statement is true.

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