Which of the following is correct regarding accrual accounting?

Question

Quizplus · Accepted Answer

Adjusting the accounts is a technique used to accomplish accrual accounting as it ensures that revenues and expenses are recorded in the period in which they are earned or incurred, regardless of when cash is received or paid.

Answer: C 
 Expenses are recorded when earned in accrual accounting, meaning they are recognized in the period in which they contribute to the generation of revenue, even if cash has not yet been paid.

Therefore, the correct choices are A and C. Choice B is incorrect as revenues are recorded when earned, not when received. Choice D is incorrect as net income is calculated by subtracting total expenses from total revenues, not just cash receipts and payments.

Which of the Following Is Correct Regarding Accrual Accounting