Under the accrual basis of accounting, gains and losses on disposal of capital assets
A) are not recognized.
B) are recognized when the proceeds (cash) of the sale are received (on the installment basis).
C) are recognized only if there is a gain.
D) are recognized when the sale occurs, regardless of when the cash is collected.

Question

Quizplus · Accepted Answer

Under the accrual basis of accounting, gains and losses on the disposal of capital assets are recognized when the sale occurs, not when the cash is collected. This approach matches revenues and expenses to the period in which they are incurred, regardless of the timing of cash flows.

Under the Accrual Basis of Accounting, Gains and Losses on Disposal