Which of the following is a benefit of using an accrual accounting system?
A) It accurately specifies a company's current cash position.
B) It is only appropriate for cash-based businesses.
C) It greatly reduces the demand on bookkeeping.
D) It can be used to affect tax bills.
E) It provides a more accurate indication of the profitability of a business.

Question

Quizplus · Accepted Answer

Accrual accounting recognizes income and expenses when they are earned and incurred, regardless of when the actual cash is received or paid. This provides a more accurate indication of the profitability of a business as it matches revenue and expenses in the periods in which they were generated.

Which of the Following Is a Benefit of Using an Accrual