When a business uses up its resources to generate revenues for the period,it reports an expense only when it pays for them.
BT: Comprehension

Question

Quizplus · Accepted Answer

The statement is false. The accrual accounting system requires businesses to report expenses when they are incurred, not when they are paid for. This means that if a business uses up its resources to generate revenues during a period, it must report the expense for those resources in the same period, regardless of whether it has paid for them yet.

When a Business Uses Up Its Resources to Generate Revenues