The primary difference between accrual-basis and cash-basis accounting is:
A)The timing of when revenues and expenses are recorded.
B)Cash-basis accounting is allowed for financial reporting purposes but not accrual-basis accounting.
C)Accrual-basis accounting violates both the revenue recognition and matching principles.

Question

Quizplus · Accepted Answer

The primary difference between accrual-basis and cash-basis accounting is the timing of when revenues and expenses are recorded. In cash-basis accounting, revenues and expenses are only recognized when the cash is actually received or paid out. In accrual-basis accounting, revenues are recognized when they are earned, regardless of when the cash is received, and expenses are recognized when they are incurred, regardless of when the cash is paid out. This makes accrual-basis accounting more accurately reflect a company's financial performance over a period of time.

The Primary Difference Between Accrual-Basis and Cash-Basis Accounting Is