Accrual accounting can result in wide variations in operating result within an industry.

Question

Quizplus · Accepted Answer

Accrual accounting records revenue and expenses when they are earned/incurred, regardless of when payment is actually received or made. This can lead to different companies within an industry showing different levels of revenue and expenses in any given period, depending on the timing of transactions. Therefore, accrual accounting can result in wide variations in operating results within an industry.

Accrual Accounting Can Result in Wide Variations in Operating Result