Which of the Following Statements Concerning Accrual-Basis Accounting Is Incorrect

question 278

Multiple Choice

Which of the following statements concerning accrual-basis accounting is incorrect?

• A) Accrual-basis accounting follows the revenue recognition principle.
• B) Accrual-basis accounting is the method required by IFRS.
• C) Accrual-basis accounting recognizes expenses when they are paid.
• D) Accrual-basis accounting follows the expense recognition principle.

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Definitions:

Conversion Costs

The combined costs of direct labor and manufacturing overheads, representing the costs involved in converting raw materials into finished products.

Work in Process

Inventory that includes goods in the process of being manufactured but not yet completed.

Manufacturing Cost

The total sum of expenses related to producing goods, including raw materials, labor, and overhead costs.

Equivalent Units

A concept used in process costing that converts partially completed units into a smaller number of fully completed units, facilitating cost calculation.