Which one of the following statements is true?

Question

Quizplus · Accepted Answer

Accruals are adjustments made to a company's financial statements to show the revenue earned and expenses incurred during a period, regardless of cash flow. Therefore, they are recorded prior to the associated cash flow taking place. Cash is not used in the accrual process, and accrual accounting recognizes revenues and expenses based on when they are earned or incurred, not based on current period cash flows. Accrual accounting always involves one asset account and one liability account.

Which One of the Following Statements Is True