Questions
Single choice
Accrual accounting recognises incomes and expenses:
Options
A.When cash is received or paid.
B.When they are earned or incurred, regardless of cash flow.
C.Only at the end of the accounting period.
D.When the financial statements are prepared.
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Step-by-Step Analysis
Accrual accounting focuses on the timing of economic events rather than cash movements, so it recognizes incomes and expenses when they are earned or incurred, not when cash changes hands.
Option 1: 'When cash is received or paid.' This de......Login to view full explanationLog in for full answers
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Similar Questions
Which of the following is true with respect to accrual accounting?
Schneider Incorporated had salaries payable of $60,900 and $91,000 at the beginning and end of the year, respectively. During the year, Schneider recorded $622,000 in salaries expense in its income statement. Cash outflows for salaries during the year were:
Molly's Auto Detailers maintains its records on the cash basis. During the year, Molly's collected $72,800 from customers and paid $20,100 in expenses. Depreciation expense of $3,900 would have been recorded on the accrual basis. Over the course of the year, accounts receivable increased $5,900, prepaid expenses decreased $1,700, and accrued liabilities decreased $1,200. Molly's accrual-basis net income was:
Which method will allow you to book lower expenses, over longer periods of time?
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