If a business records revenues when earned,regardless of whether cash has been received,and records expenses when they are incurred,the accounting system is a(n)
A) accrual basis of accounting.
B) cash basis of accounting.
C) modified cash basis of accounting.
D) revenue basis of accounting.

Question

Quizplus · Accepted Answer

The given scenario describes the accrual basis of accounting, where revenues and expenses are recognized when they are earned and incurred, respectively, regardless of the cash flow. This method provides a more accurate representation of the financial performance of a business than the cash basis of accounting, where revenues and expenses are recorded only when cash is received or paid. The other options, modified cash basis of accounting and revenue basis of accounting, are not commonly used accounting methods.

If a Business Records Revenues When Earned,regardless of Whether Cash