Which of the following statements is TRUE of accrual basis accounting?
A) Accrual basis accounting is required by Generally Accepted Accounting Principles (GAAP).
B) Accrual basis accounting records expenses only when cash has been paid for them.
C) Accrual basis accounting records revenue only when cash is received.
D) Accrual basis accounting always results in greater net income than cash basis accounting.

Question

Quizplus · Accepted Answer

Accrual basis accounting is required by Generally Accepted Accounting Principles (GAAP). This means that companies must use accrual basis accounting to prepare their financial statements in accordance with GAAP. Accrual basis accounting records revenue and expenses when they are earned or incurred, regardless of when cash is received or paid. This allows for a more accurate representation of a company's financial performance and position.

Which of the Following Statements Is TRUE of Accrual Basis