Accruals occur when cash flows:
A) Occur before expense recognition.
B) Occur after revenue or expense recognition.
C) Are uncertain.
D) May be substituted for goods or services.

Question

Quizplus · Accepted Answer

Accruals occur when cash flows occur after revenue or expense recognition. This means that the revenue or expense has been recorded even though the cash related to it has not been received or paid out yet. This is based on the accrual accounting method, which recognizes revenue and expenses when they are incurred, regardless of the cash flows associated with them.

Accruals Occur When Cash Flows