Under the accrual basis of accounting
A)cash must be received before revenue is recognized.
B)net income is calculated by matching cash outflows against cash inflows.
C)revenue is recognized when earned, while expenses are recognized when incurred to generate revenue.
D)the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles.

Question

Quizplus · Accepted Answer

Under the accrual basis of accounting, revenue is recognized when it is earned, regardless of when the cash is received, and expenses are recognized when they are incurred to generate revenue. This principle ensures that financial statements reflect the actual financial position of a business by matching revenues to the periods in which they are earned and matching expenses to the periods in which they are incurred.

Under the Accrual Basis of Accounting