QuestionAugust 9, 2025

Which of the following are used as basis for determining periodic profit. Choose two. Answer Instructions (1) Modified cash basis Strategic basis Accrual basis

Which of the following are used as basis for determining periodic profit. Choose two. Answer Instructions (1) Modified cash basis Strategic basis Accrual basis
Which of the following are used as basis for determining periodic profit. Choose two. Answer Instructions (1) Modified cash basis Strategic basis Accrual basis

Solution
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Answer

Modified cash basis, Accrual basis Explanation 1. Identify Basis for Determining Periodic Profit The two primary bases used for determining periodic profit are the **Modified Cash Basis** and the **Accrual Basis**. 2. Explain Each Basis - **Modified Cash Basis**: Combines elements of both cash and accrual accounting, recognizing revenues when they are received in cash and expenses when they are paid. - **Accrual Basis**: Recognizes revenues when earned and expenses when incurred, regardless of when cash transactions occur.

Explanation

1. Identify Basis for Determining Periodic Profit<br /> The two primary bases used for determining periodic profit are the **Modified Cash Basis** and the **Accrual Basis**. <br /><br />2. Explain Each Basis<br /> - **Modified Cash Basis**: Combines elements of both cash and accrual accounting, recognizing revenues when they are received in cash and expenses when they are paid.<br /> - **Accrual Basis**: Recognizes revenues when earned and expenses when incurred, regardless of when cash transactions occur.
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