What is the accrual basis of accounting?

Question

Quizplus · Accepted Answer

The accrual basis of accounting records economic events when they happen rather than only when cash exchanges occur. This means that revenues and expenses are recognized when they are earned or incurred, regardless of whether or not cash has been received or paid out. This method provides a more accurate picture of a company's financial performance and position, as it takes into account all economic activity during the period, not just cash transactions.

What Is the Accrual Basis of Accounting