Accrual basis accounting records revenues when earned and expenses when incurred, regardless of when the related cash is received or paid.

Question

Quizplus · Accepted Answer

Accrual basis accounting recognizes revenues when they are earned, even if the cash has not yet been received. It also records expenses when they are incurred, even if the cash has not yet been paid. This approach provides a more accurate picture of a company's financial performance over a given period, as it reflects the economic reality of the transactions rather than just the timing of cash flows.

Accrual Basis Accounting Records Revenues When Earned and Expenses When