The correct answer is:
C. Accrual Accounting ✅
👉 Explanation:
Cash Accounting → Records transactions only when cash is received or paid. This does not always reflect true profitability, because revenues and expenses may occur in different periods.
Flow of Funds Accounting → Focuses on the movement of funds and resources, not on profitability.
Accrual Accounting → Records income when earned and expenses when incurred, regardless of cash flow.
This matches revenues with related expenses in the correct period.
Hence, it provides the most accurate picture of profitability.