Chapter 5, Problem 5QY

Under the cash basis of accounting, which of the following statements is true?

1. a. Revenue is recorded when it is earned, regardless of when the cash is received.
2. b. Expenses are recorded when they are paid.
3. c. Expenses are recorded when they are incurred, regardless of when the cash is paid.
4. d. The cash basis of accounting is allowed for all corporations.