The practice of recording economic activity when it is recognized rather than waiting until it is realized is called:
A)GAAP accounting
B)accrual accounting
C)forward-looking accounting
D)management accounting

Question

Quizplus · Accepted Answer

Accrual accounting records economic activity when it is recognized, regardless of when it is realized. This method recognizes revenue when it is earned and expenses when they are incurred, even if payment has not yet been received or made. This approach provides a more accurate picture of a company's financial position and performance than cash-basis accounting, which only records transactions when cash changes hands. GAAP accounting refers to generally accepted accounting principles, which provide guidance on financial reporting standards. Forward-looking accounting and management accounting are not recognized terms in accounting.

The Practice of Recording Economic Activity When It Is Recognized