Question

Which of the following is false? Group of answer choices Under accrual basis accounting, companies record revenues when they receive cash and record expenses when they pay cash. There are two types of adjusting entries: deferrals and accruals. Every adjusting entry will include one income statement account and one balance sheet account. Accrued revenue is revenue that has been earned but not yet received in cash or recorded.

Answer 1

Answer:

Under accrual basis accounting, companies record revenues when they receive cash and record expenses when they pay cash

Explanation:

The accrual accounting method is one of the two accounting methods used to record the transactions. Cash accounting is the other method. Under the accrual methods, revenue is recognized the moment its earned even if payment has not been received. Likewise, an expense is recorded when incurred regardless of whether payment has been made or not.

The accrual method recognizes income and expenses in the period that the economic transaction happened.  Money need not change hands for the income or expense to be recorded in the books of accounts.

Cash accounting methods is the accounting technique that recognizes income and revenue only when money changes hands.