Which of the following concepts is important to accrual accounting?
A)Time period, because accrual accounting divides earnings into time periods.
B)Market basis, because inflation is a big factor in the environment.
C)Cash basis, because if cash is not received, revenue is not accrued.
D)Entity concept, because personal transactions must be separated from business transactions.

Question

Quizplus · Accepted Answer

Accrual accounting is based on dividing earnings into time periods, recognizing revenue and expenses as they are earned or incurred, regardless of when cash is received or paid. Therefore, the concept of time period is important to accrual accounting.

Which of the Following Concepts Is Important to Accrual Accounting