Transactions where cash is received before being earned often result in adjusting entries at the end of the period to record proﬁt in the proper period.

Question

Quizplus · Accepted Answer

This statement is true as per the accrual basis of accounting, which requires revenue to be recognized when earned and not when cash is received. If cash is received before the revenue is earned, adjusting entries are required at the end of the period to ensure that the revenue is recorded in the proper period.

Transactions Where Cash Is Received Before Being Earned Often Result