Question

Accrual accounting: A. is the system of accounting that records revenues in the accounting period in...

Accrual accounting:

A. is the system of accounting that records revenues in the accounting period in which they are earned and expenses in the accounting period in which the resources are used.

B. is the system of accounting that records revenues in the period in which cash payment is received and expenses in the accounting period when payment is made.

C. is not a form of accounting

D. is the accounting policy requiring that onces the proper accounting treatment for an issue has been determined, it be used consistently in future years.
Business   Accounting   
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Homework Answers

Answer #1

Answer : option ( A )

Explanation :

DIFFERENCE BETWEEN THE ACCRUAL BASIS AND CASH BASIS OF ACCOUNTING.

Here the main difference between accrual and cash basis of accounting is the time,that is timing of when revenue and expenses are recognized in the books of accounts.

The cash method accounts for revenue only when the money is received and for expenses only when the money is paid out .

On the other hand, the accrual method accounts for revenue when it is earned and expenses goods and services when they are incurred . The revenue is recorded even if cash has not been received or if expenses have been incurred but no cash has been paid.

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