Question

Accrual basis accounting records ______. (Check all that apply.)

Answer 1

Answer:

The following applies:

1. expenses when incurred to generate revenue.

2. expenses even when cash has not yet been paid

3. revenue even when cash has not been collected

4. revenue when earned

Explanation:

Accrual basis is an accounting concept that recognizes revenue when earned when if the collection of cash will be done later.

It also recognizes expenses when incurred even though the cash has not been spent.

Accrual basis matches a transaction with when it happened.

It is different from cash basis which recognizes revenues only when the cash is received and expenses only when the cash has been spent.