Adjustments where income is earned or expenses incurred before the cash is received or paid are called:
A) deferrals.
B) prepayments.
C) unrecorded adjustments.
D) accruals.

Question

Quizplus · Accepted Answer

These types of adjustments are called accruals. Accruals involve recording revenue or expenses in the period they are earned/incurred, even if payment hasn't been received or made yet. This is needed to ensure that financial statements accurately reflect the company's financial position for the period.

Adjustments Where Income Is Earned or Expenses Incurred Before the Cash