The accrual basis of accounting recognizes revenues when cash is received from customers,regardless of when the goods or services are provided.

Question

Quizplus · Accepted Answer

The statement is incorrect. The accrual basis of accounting recognizes revenues when they are earned, regardless of when cash is received. Similarly, expenses are recognized when they are incurred, not when they are paid. This method provides a more accurate picture of a company's financial performance by matching revenues and expenses in the correct accounting period, even if the actual cash flow occurs at a different time.

The Accrual Basis of Accounting Recognizes Revenues When Cash Is