Accrual accounting relates the financial effects of a company's transactions
A)so that the costs of nonoperating events are matched to the balance sheet in the period impacted
B)to the period in which they occur rather than to when the cash receipts or payment occurs
C)so that the revenue impact of every transaction in a period is properly reflected in the income statement
D)so that the impact of every transaction is reflected in the statement of cash flows

Question

Quizplus · Accepted Answer

Accrual accounting records revenue and expenses in the period in which they occur, rather than when cash is received or paid. This provides a more accurate picture of a company's financial performance and allows for better forecasting and decision-making. Choices A, C, and D are partially correct but do not fully capture the purpose of accrual accounting. Matching nonoperating events to the balance sheet is one aspect of accrual accounting, properly reflecting revenue impact is another aspect, and the statement of cash flows is a separate financial statement that presents information about a company's cash inflows and outflows.

Accrual Accounting Relates the Financial Effects of a Company's Transactions