Two accounting principles central to accrual accounting basis that are relied on in the adjusting process are:
A) Revenue recognition and going-concern.
B) Revenue recognition and monetary unit.
C) Expense recognition (matching) and cost.
D) Revenue recognition and Expense recognition (matching).
E) Expense recognition (matching) and business entity.

Question

Quizplus · Accepted Answer

Accrual accounting basis relies on both revenue recognition and expense recognition (matching) principles in the adjusting process. The revenue recognition principle dictates that revenue should be recognized when it is earned, regardless of when payment is received. The expense recognition (matching) principle states that expenses should be recognized in the same period as the revenue they helped generate. Therefore, D is the best choice as it includes both principles central to accrual accounting.

Two Accounting Principles Central to Accrual Accounting Basis That Are