What is the accrual basis of accounting? (A) Recognition of revenue when it is received in cash. (B) Recognition of revenue in the accounting period when the sale is made rather than when cash is received. (C) Matching expenses with revenue in the appropriate accounting period. (D) Both (b) and (c)

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Business

Lincoln Cochran

2 June, 04:43

What is the accrual basis of accounting? (A) Recognition of revenue when it is received in cash. (B) Recognition of revenue in the accounting period when the sale is made rather than when cash is received. (C) Matching expenses with revenue in the appropriate accounting period. (D) Both (b) and (c)

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Leonard · Answer 1

Answer: Option (D) is correct.

Explanation:

Correct option : Recognition of revenue in the accounting period when the sale is made rather than when cash is received and Matching expenses with revenue in the appropriate accounting period.

Accruel basis accounting is basically the record of financial statements when the revenue was earned and it also matches the expenses of the company with its revenue.

For example, when the invoice is issued to the customer then immediately it records in a revenue.

It has an advantage that it matches the companies expenses with the revenue, so that one can see the impact of these business transaction in an accounting period.