The accrual basis of accounting results in a more accurate measurement of net income for the period than does the cash basis of accounting.

Question

Quizplus · Accepted Answer

The accrual basis of accounting records revenues and expenses when they are earned or incurred, regardless of when the cash is received or paid. This gives a more accurate picture of the financial performance of a business during a period, as it takes into account all transactions that affect the income statement. In contrast, the cash basis of accounting only records revenues and expenses when cash is received or paid, which may not reflect the actual economic activity of the business during the period.

The Accrual Basis of Accounting Results in a More Accurate