Which of the following statements is correct?
A)Under the accrual basis of accounting, revenue is recorded in the period in which it is received.
B)Under the accrual basis of accounting, revenue is recorded in the period in which it is earned.
C)Under the accrual basis of accounting, revenue is recorded in the period in which it is paid.
D)Under the accrual basis of accounting, expenses are recorded in the period in which they are paid.

Question

Quizplus · Accepted Answer

Under the accrual basis of accounting, revenue is recorded in the period in which it is earned, not necessarily when it is received. Similarly, expenses are recorded in the period in which they are incurred, not necessarily when they are paid. This method recognizes revenue and expenses based on their economic impact, rather than when the payment is made or received.

Which of the Following Statements Is Correct