Which of the following is TRUE of accrual basis accounting?

Question

Quizplus · Accepted Answer

Accrual basis accounting recognizes revenue and expenses when they are incurred or earned, regardless of when cash is received or paid. Therefore, expenses are recognized when they are incurred, regardless of when cash is paid. Option A is incorrect because it implies that expenses are only recognized when cash is paid, which is not true in accrual accounting. Option B is incorrect because it implies that revenue is only recognized when cash is received, which is not true in accrual accounting. Option D is incorrect because it adds an unnecessary condition for recognizing revenue (i.e., showing interest to purchase).

Which of the Following Is TRUE of Accrual Basis Accounting