Which of the following statements is correct?

Question

Quizplus · Accepted Answer

Revenues are recognized on the income statement when they are earned, regardless of whether payment has been received. This is known as the accrual basis of accounting. B is incorrect because expenses are recognized on the income statement when they are incurred, not necessarily when they are paid for. C is incorrect because dividend payments are not included in the calculation of net income. D is incorrect because net income and net cash generated by operations can be different due to non-cash items such as depreciation or changes in accounts receivable and accounts payable.

Which of the Following Statements Is Correct