In order to calculate profit with a reasonable degree of precision, it is important to match income and expenses in the statement of profit or loss.This is an accounting convention known as which of the following?
A)The accruals convention.
B)The profit convention.
C)The realization convention.
D)The recognition convention.

Question

Quizplus · Accepted Answer

The accruals convention requires income and expenditures to be matched and recorded in the period in which they are incurred, regardless of when the money is received or paid out. This approach offers a more accurate picture of a company's financial position than the cash accounting method, which only records transactions when cash changes hands.

In Order to Calculate Profit with a Reasonable Degree of Precision