Team Shirts ordered T-shirts from its supplier in June.The T-shirts were delivered in July.Team Shirts paid the bill in August and sold the T-shirts in September.When should Team Shirts recognize an expense using accrual accounting?
A)June
B)September
C)August
D)July

Question

Quizplus · Accepted Answer

Accrual accounting recognizes revenue and expenses when they are earned or incurred, regardless of when the money is actually received or paid. In this case, the T-shirts were sold in September, so that is when the expense should be recognized.

Team Shirts Ordered T-Shirts from Its Supplier in June