What accounting concept justifies the usage of accruals and deferrals?
A)Going concern assumption
B)Materiality constraint
C)Consistency characteristic
D)Monetary unit assumption

Question

Quizplus · Accepted Answer

The going concern assumption justifies the use of accruals and deferrals, as it assumes that the company will continue to operate indefinitely. Accruals and deferrals allow for the recognition of revenue and expenses in the appropriate accounting period, even if they have not been received or incurred yet. This ensures that financial statements accurately reflect the company's financial position and performance, which is important for making informed decisions.

What Accounting Concept Justifies the Usage of Accruals and Deferrals