Under accrual accounting, revenues and their associated expenses are recognized when a sale occurs, regardless of when cash revenues or expenses occur.

Question

Quizplus · Accepted Answer

Accrual accounting recognizes revenues and expenses when they are earned or incurred, regardless of when cash is exchanged. This means that revenue is recorded when it is earned, even if the customer has not yet paid, and expenses are recorded when they are incurred, even if the business has not yet paid for them.

Under Accrual Accounting, Revenues and Their Associated Expenses Are Recognized