The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:
A)The matching principle.
B)The operating cycle of a business.
C)Cash basis accounting.
D)Accrual basis accounting.
E)The revenue recognition principle.

Question

Quizplus · Accepted Answer

The approach described is based on recognizing revenues when they are earned (rather than when cash is received) and matching expenses to those revenues. This is the fundamental principle of accrual basis accounting.

The Approach to Preparing Financial Statements Based on Recognizing Revenues