Under the accrual basis of accounting
A) Revenue is recorded in the period in which it is earned and expenses are recorded in the period in which incurred.
B) Expenses are recorded in the period in which they are incurred and revenue is recorded when payment is received.
C) Revenue and expenses are recorded when cash is received or paid.
D) When revenues and expenses are recorded is up to the owners and/or managers.

Question

Quizplus · Accepted Answer

Under the accrual basis of accounting, revenue is recognized in the period in which it is earned, regardless of when payment is received. Similarly, expenses are recognized in the period in which they are incurred, regardless of when payment is made. This method provides a more accurate picture of a company's financial health and performance, as it matches revenue with the expenses it generates.

Under the Accrual Basis of Accounting