Accrual basis accounting records the impact of a business transaction as it occurs. When the business performs a service, makes a sale, or incurs an expense, the transaction will be recorded even if the business did not receive or did not pay any cash. In accrual basis accounting, companies record revenues when they are earned and record expenses when they are incurred. Recording regardless of monetary inflows and outflows forms the basis of accrual basis accounting. So, the profitability of the company applying accrual basis accounting can be measured much better when compared with applying the cash basis accounting.

The correct answer is C.