The Zane health plan uses a base of accounting known as accrual-basis accounting.

Enables an interested party to view the consequences of obligations incurred by Zane, but only if the health plan ultimately completes the business transaction

Is not suitable for measuring Zane's profitability

Requires Zane to record revenues when they are earned and expenses when they are incurred, even if cash has not actually changed hands

Prohibits Zane from making adjusting entries to its accounting records at the end of each accounting year