Which of the following statements is correct?

Question

Quizplus · Accepted Answer

Revenues are reported on the income statement regardless of whether the customer has paid for the goods or services. This is known as the accrual basis of accounting, where revenues and expenses are recognized when they are earned/incurred, not necessarily when cash is received/paid.

B is incorrect because expenses are reported on the income statement during the period they are incurred, regardless of whether they have been paid for or not.

C is incorrect because dividend payments are not deducted from net income. Dividends are paid out of net income, but they are not a deduction from it.

D is incorrect because net income is not the same as net cash generated by operations. Net income is the profit earned by the company after all expenses have been deducted from revenues, while net cash generated by operations refers to the cash inflows and outflows from the company's operating activities. They may be different due to factors such as noncash expenses or changes in working capital.

Which of the Following Statements Is Correct