When companies record transactions in the period in which the events occur, ______ is being applied.
A) accrual-basis accounting.
B) the time period assumption.
C) the matching of the income statement with the statement of financial position.
D) the expense recognition principle.

Question

Quizplus · Accepted Answer

Accrual-basis accounting records transactions in the period in which the events occur, regardless of when the cash is received or paid out. This ensures that expenses are matched with the revenues they generate in the same period, as per the matching principle, and that financial statements accurately represent the financial position and performance of the company. The time period assumption and expense recognition principle are related to accrual-basis accounting, but do not fully encompass it. The matching of the income statement with the statement of financial position is a general goal of financial reporting, but not specific to accrual-basis accounting.

When Companies Record Transactions in the Period in Which the Events