Which of the following statements is true of accrual basis accounting?
Which of the following statements is true of accrual basis accounting?
Accrual basis accounting records revenue only when cash is received.
Accrual basis accounting always results in greater net income than cash basis accounting.
Accrual basis accounting records expenses only when cash has been paid for them.
Accrual basis accounting is required by Generally Accepted Accounting Principles (GAAP).
Homework Answers
| Answer : Accrual basis accounting is required by Generally Accepted Accounting Principles (GAAP). |
| Explanation : |
| In cash basis of accounting, income and expenditure is recorded only when the cash for the same is received or paid. |
| In accrual basis of accounting, income and expenditure is recorded when the same is accrued. |
| GAAP requires accrual basis of accounting as it records the income and expenditure in the same accounting year in which it is incurred. |
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Which of the following statements is true of accrual basis accounting?
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