Which of the following statements about accrual accounting is true ?
A) Revenue is recorded only when cash is received.
B) Expenses are recorded when they are incurred.
C) Revenue is recorded in the period when it is earned.
D) Revenue is recorded in the period when it is earned and expenses are recorded when they are incurred.

Question

Quizplus · Accepted Answer

Accrual accounting is a method of accounting that recognizes revenue when it is earned and expenses when they are incurred, regardless of when the actual cash is received or paid. Therefore, option D is the correct statement about accrual accounting. Option A is incorrect because revenue is recorded when earned, not when cash is received. Option B is incorrect because expenses are recorded when they are incurred, not when they are paid. Option C is partially correct in that revenue is recorded in the period when it is earned, but it does not account for expenses.

Which of the Following Statements About Accrual Accounting Is True