Porite Company recognizes revenue in the period in which it records an asset for the related account receivable, rather than in the period in which the account receivable is collected in cash. Porite's practice is an example of:
A) Cash basis accounting.
B) Accrual accounting.
C) The matching principle.
D) Economic entity.

Question

Quizplus · Accepted Answer

Porite Company's practice of recognizing revenue in the period in which it records an asset for the related account receivable is an example of accrual accounting, in which revenue is recognized when it is earned, rather than when cash is received.

Porite Company Recognizes Revenue in the Period in Which It