Question

Reporting revenues when the goods or services are provided and expenses when they are incurred is called:________

Answer 1

Reporting revenues when the goods or services are provided and expenses when they are incurred is called accrual accounting.

What is accrual accounting?

Accrual accounting is a method used to record revenues or expenses where revenue is recorded when a service is provided and an expense is recorded when incurred.

The purpose of accrual accounting is to match income and expenses with the period in which they occur. The accrual accounting method is the method approved by the IFRS and the US GAAP.

In contrast to accrual accounting, there is another accounting method known as cash accounting. In cash accounting, revenue is recorded only when cash is received and expenses are recorded only when cash is paid.

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