Select the one term that best fits each definition.
-Reporting income when it is earned and expenses when they are incurred.
A) accrual basis of accounting
B) adjusting entries
C) adjustments
D) balance sheet
E) cash basis of accounting
F) fiscal period
G) fiscal year
H) income statement
I) net income
J) net loss
K) prepaid expense
L) trial balance
M) work sheet

Question

Quizplus · Accepted Answer

The accrual basis of accounting recognizes income when it is earned and expenses when they are incurred, regardless of when the cash is actually received or paid. This contrasts with the cash basis of accounting, where transactions are recorded only when cash changes hands.

Select the One Term That Best Fits Each Definition