What accounting concept justifies the use of accruals and deferrals?
A) Going-concern assumption
B) Corporate form of organization
C) Consistency characteristic
D) Arm's-length transactions

Question

Quizplus · Accepted Answer

The going-concern assumption justifies the use of accruals and deferrals because it assumes that a business will continue to operate indefinitely. Accruals and deferrals help to accurately reflect a company's financial position and performance by recognizing revenues and expenses in the appropriate accounting period, even if cash has not been exchanged. This reflects the long-term perspective of the going-concern assumption.

What Accounting Concept Justifies the Use of Accruals and Deferrals