Kale Inc. uses accrualbasis accounting. It can be said that Kale's revenue initially reflects as an increase in accounts receivable instead of an increase in cash.

Question

Kale Inc. uses accrual­basis accounting. It can be said that Kale's revenue initially reflects as an increase in accounts receivable instead of an increase in cash.

Quizplus · Accepted Answer

Accrual-basis accounting records revenue when it is earned, not when cash is received. This means that when Kale Inc. earns revenue, it will initially reflect as an increase in accounts receivable (an asset) and not an increase in cash.

Kale Inc Uses Accrual­basis Accounting

Kale Inc Uses Accrualbasis Accounting