Which of the following is an application of accrual accounting?
A)Depreciating a building as quickly as allowed by income tax regulations.
B)Recording utilities expense in the accounting period covered by the monthly bill.
C)Expensing a machine in its entirety when purchased.
D)Recording revenue at the time payment is received.

Question

Quizplus · Accepted Answer

Recording utilities expense in the accounting period covered by the monthly bill is an example of accrual accounting, as it recognizes and records expenses in the period they were incurred, regardless of when payment is made. This is in contrast to cash accounting, where expenses are recorded only when payment is made. Option A refers to tax regulations and option C refers to expensing a machine entirely, which do not necessarily relate to accrual accounting. Option D refers to cash accounting, where revenue is recognized only when payment is received.

Which of the Following Is an Application of Accrual Accounting