Under the Accrual Basis of Accounting

question 67

Multiple Choice

Under the accrual basis of accounting

• A) Revenue is recorded in the period in which it is earned and expenses are recorded in the period in which incurred.
• B) Expenses are recorded in the period in which they are incurred and revenue is recorded when payment is received.
• C) Revenue and expenses are recorded when cash is received or paid.
• D) When revenues and expenses are recorded is up to the owners and/or managers.

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Definitions:

Fair Value

The estimated market value of an asset or liability, reflecting the price it would fetch in an orderly transaction between market participants at the measurement date.

Book Value

The net value of a company's assets, minus its liabilities, as it appears on the balance sheet.

Depreciation Expense

Spreading out the cost of a tangible resource over the period it is expected to be used.