The _______________ requires that revenue is recorded when earned and expenses are recorded when incurred.
A) accrual basis of accounting
B) cash basis of accounting
C) hybrid basis of accounting
D) GAAP basis of accounting

Question

Quizplus · Accepted Answer

The accrual basis of accounting requires revenue to be recognized when it is earned, regardless of when payment is received, and expenses to be reported when they are incurred, regardless of when payment is made. This is in contrast to the cash basis of accounting, which only records transactions when cash is received or paid out. Hybrid and GAAP basis of accounting are not synonymous with accrual basis accounting, though GAAP standards require the use of accrual accounting.

The _______________ Requires That Revenue Is Recorded When Earned and Expenses