Which of the following statements about accrual basis accounting is correct?
A)If a company uses accrual basis accounting,the company should not record revenue until payments are actually received.
B)If a company uses accrual basis accounting,the company should record expenses in the same period as the revenues they generate.
C)IFRS does not allow accrual basis accounting for external reporting of income.
D)The items reported on the income statement continue to have an impact beyond the current period,whereas the items reported on the balance sheet impact just the current period.

Question

Quizplus · Accepted Answer

The expense recognition principle ("matching")requires the recording of expenses in the same period as the revenues they generate,not necessarily the period in which cash is paid for them.According to GAAP and IFRS,the accrual basis is the only acceptable method for external reporting of income.The revenue recognition principle requires a seller to record revenue when the seller provides the goods or services to customers,in the amount the seller expects to be entitled to receive.Items reported on the balance sheet items (rather income statement items)continue to have an impact beyond the current period;whereas items reported on the income statement (rather than balance sheet items)impact just the current period.

Which of the Following Statements About Accrual Basis Accounting Is