Asked by Grant Haake on Apr 26, 2024
Verified
Using accrual accounting, revenues are recorded
A) when cash is received without regard to when the services are performed or products have been delivered to customers
B) when a service has been performed or products have been delivered to customers without regard to when cash is received
C) when cash is received at the time services are performed or products have been delivered to customers
D) only if cash is received after the services are performed or products have been delivered to customers
Accrual Accounting
An accounting method that records revenues and expenses when they are earned or incurred, regardless of when cash transactions occur.
Revenues Recorded
The act of documenting income generated from normal business operations, such as sales of goods or services, in the financial records.
- Acknowledge the essential aspects of revenue recognition and matching of expenses pertinent to the formulation of financial statements.
- Differentiate the principles of cash basis and accrual basis accounting.
Verified Answer
TC
Tyler CerioneApr 30, 2024
Final Answer :
B
Explanation :
Accrual accounting records revenues when a service has been performed or products have been delivered to customers without regard to when cash is received. This means that revenue is recognized when the performance obligation is satisfied, regardless of whether cash has been received or not. This approach provides a more accurate picture of a company's financial performance over a given period of time.
Learning Objectives
- Acknowledge the essential aspects of revenue recognition and matching of expenses pertinent to the formulation of financial statements.
- Differentiate the principles of cash basis and accrual basis accounting.