Question

True or False

A. A general ledger is a central collection and reporting system aggregating financial data.

B. An accrual always occurs when revenue and expenses are recognized and cash is received.

C. GAAP requires related revenues and expenses to be recognized when cash is exchanged.

D. The cost principle requires that financial statements be based on today's replacement cost.

Answer 1

A.True

B.False

Accrual accounting is an accounting method where revenue or expenses are recorded when a transaction occurs rather than payment is received or made.it follows the matching principle that says revenues and expenses should be recognized in the same period.

C.False

Revenues are recognized when they are realized and are earned (usually when goods are transferred or services rendered),no matter when cash is received.

D.False

The cost principle is an accounting principle that records assets at their respective cash amounts at the time the asset was purchased or acquired.Assets are always recorded at their original cost.