Under the accrual basis of accounting

Question

Quizplus · Accepted Answer

Under the accrual basis of accounting, revenue is recognized when it is earned, regardless of when it is received, and expenses are recognized when they are incurred, regardless of when they are paid. This method provides a more accurate picture of a company's financial performance and ensures that revenue and expenses are matched appropriately. Option B is incorrect because cash basis accounting records revenue and expenses only when cash is received or paid. Option C is incorrect because it contradicts the accrual basis of accounting. Option D is incorrect because accounting standards dictate when revenue and expenses should be recorded, not the owners/managers.

Under the Accrual Basis of Accounting