Accrual basis accounting records financial transactions even when the organization does not have sufficient cash flow.

Question

Quizplus · Accepted Answer

Accrual accounting recognizes revenue and expenses when they are earned or incurred, regardless of whether or not cash has been exchanged. This means that even if an organization does not have sufficient cash on hand, the financial transaction will still be recorded on their books.

Accrual Basis Accounting Records Financial Transactions Even When the Organization