The accounting principle upon which deferrals and accruals are based is
A) matching
B) cost
C) price-level adjustment
D) conservatism

Question

Quizplus · Accepted Answer

Deferrals and accruals are based on the matching principle, which requires companies to match expenses with the revenues they help generate. Deferrals delay the recognition of revenue or expenses until a later period, while accruals recognize revenue or expenses before cash is exchanged. Both deferrals and accruals ensure that revenues and expenses are properly matched and recorded in the correct accounting period.

The Accounting Principle Upon Which Deferrals and Accruals Are Based