Asked by Angela Pantoja on Jul 15, 2024
Verified
Explain how a company uses the accrual basis of accounting.
Accrual Basis
An accounting method where revenues and expenses are recorded when they are earned or incurred, regardless of when the cash is exchanged.
- Understand the role of accrual accounting in improving the utility of financial statements.
Verified Answer
KH
Kirti HoodaJul 18, 2024
Final Answer :
Financial information is more comparable when revenues are consistently recorded in the period in which they are earned and expenses are consistently recorded in the periods in which they are incurred.Adjusting entries are made at the end of the accounting period so that timely and accurate financial statements are available for business decisions.
Learning Objectives
- Understand the role of accrual accounting in improving the utility of financial statements.
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