Which of the following statements is correct?
A) Under the accrual basis of accounting,revenue is recorded in the period in which it is earned.
B) Under the accrual basis of accounting,expenses are recorded in the period in which they are paid.
C) Under the accrual basis of accounting,revenue is recorded in the period in which it is received.
D) Under the accrual basis of accounting,revenue is recorded in the period in which it is paid.

Question

Quizplus · Accepted Answer

Under the accrual basis of accounting, revenue is recorded in the period in which it is earned, regardless of when it is actually received. Similarly, expenses are recorded in the period in which they are incurred, regardless of when they are actually paid. This method of accounting provides a more accurate picture of a company's financial performance, as it matches the revenue earned with the expenses incurred in earning that revenue, rather than just recording cash transactions.

Which of the Following Statements Is Correct