easy · Financial Accounting accounting-cycle-financial-statements

Which of these is a key difference between the 'Cash Basis' and the 'Accrual Basis' regarding expenses?

1. Accrual basis records expenses when they are incurred; cash basis records them when the money is paid.
2. Cash basis ignores the timing of cash flows.
3. Cash basis is required for all public companies; accrual basis is optional.
4. Accrual basis only recognizes expenses that involve a physical product.

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