Which of the following statements is true of accrual basis accounting?
A)Accrual basis accounting is required by Generally Accepted Accounting Principles (GAAP).
B)Accrual basis accounting records expenses only when cash has been paid for them.
C)Accrual basis accounting records revenue only when cash is received.
D)Accrual basis accounting always results in greater net income than cash basis accounting.

Question

Quizplus · Accepted Answer

Accrual basis accounting is required by Generally Accepted Accounting Principles (GAAP). This method of accounting recognizes revenue when it is earned, regardless of whether cash has been received, and recognizes expenses when they are incurred, regardless of whether cash has been paid. This provides a more accurate depiction of a company's financial position and performance.

Which of the Following Statements Is True of Accrual Basis