The accrual basis of accounting recognizes:
A) Revenue when cash is received from customers
B) Expenses when paid
C) Revenue when all or a substantial portion is performed
D) Revenue when contracts are signed

Question

Quizplus · Accepted Answer

The accrual basis of accounting recognizes revenue when it is earned or all or a substantial portion of the service or sale has been performed, regardless of when the cash is received. Similarly, expenses are recognized when they are incurred and not necessarily when they are paid. This method provides a more accurate picture of a company's financial performance and positions.

The Accrual Basis of Accounting Recognizes