What is the accounting effect of using the accrual basis of accounting?
A)revenues and expenses are recognized when cash is received.
B)revenues are recognized when earned,and expenses are recognized when cash is paid
C)revenues are recognized when earned and expenses are recognized when they are incurred
D)revenues are recognized when cash is received,and expenses are recognized when incurred

Question

Quizplus · Accepted Answer

The accrual basis of accounting recognizes revenues when they are earned, even if cash has not been received. Similarly, expenses are recognized when they are incurred, even if cash has not been paid yet. This gives a more accurate picture of a company's financial performance, as it reflects the underlying economic activities rather than just the timing of when cash changes hands.

What Is the Accounting Effect of Using the Accrual Basis