Which of the following accounting methods is required to be GAAP compliant?

The accrual basis of accounting is required to be GAAP compliant because it provides a more accurate picture of a company's financial position and performance over a given period. In this method, revenues and expenses are recognized when they are earned or incurred, regardless of when cash transactions occur. This alignment with the economic reality of business transactions allows for a more precise matching of income and expenses, which is essential for stakeholders, including investors and creditors, to assess the company's financial health.

In contrast, the cash basis method recognizes revenues and expenses only when cash is exchanged, which can distort the actual financial performance, especially in businesses with significant receivables or payables. The equity dividend basis and discounted cash flow methods are not standard accounting practices recognized by GAAP; they serve different purposes, such as evaluating investment returns or projecting future cash flows, but they do not align with GAAP requirements for general financial reporting. Thus, the accrual basis is fundamental for maintaining consistency, transparency, and comparability across financial statements as dictated by GAAP standards.