Which of the following statements is true in regard to accrual accounting?
A)Revenue is recorded only when cash is received.
B)Expenses are recorded when they are incurred.
C)Revenue is recorded in the period when it is earned.
D)Revenue is recorded in the period when it is earned and expenses are recorded when they are incurred.

Question

Quizplus · Accepted Answer

Accrual accounting records revenue in the period when it is earned, regardless of when cash is received. Similarly, expenses are recorded when they are incurred, regardless of when the payment is made. This method provides a more accurate representation of a company's financial health than cash basis accounting, which records revenues and expenses only when cash is received or paid.

Which of the Following Statements Is True in Regard to Accrual