Accruals do not occur when the cash flow precedes either revenue or expense recognition.
So, the given statement is False.
Accruals are the amount that the entity owes or that the entity must pay in the forthcoming period. In the cash flow statement, accruals are first noted as the items that link profits to cash flows. However, they are not the accruals used to calculate earnings; rather, they are adjustments to balance-sheet items, with the applicable accruals being subtracted from the cash flow.
Accrued costs go under current liabilities on the balance sheet. Using the accrual method of accounting, balance sheets and income statements are created. With this approach, earnings and costs are recorded as they happen rather than after payment. When a transaction is documented as having occurred rather than when a payment is made or received, this accounting approach is known as accrual accounting.
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