Under the accrual basis of accounting
A)cash must be received before revenue is recognized.
B)profit is calculated by matching cash outflows against cash inflows.
C)the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared.
D)events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received.

Question

Quizplus · Accepted Answer

Under the accrual basis of accounting, events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received. This means that revenue is recognized when it is earned, regardless of whether cash has been received, and expenses are recognized when they are incurred, regardless of whether cash has been paid. The accrual basis provides a more accurate picture of a company's financial performance than the cash basis, which only records transactions when cash is received or paid.

Under the Accrual Basis of Accounting