How Are Revenues and Expenses Recognized Under the Accrual Basis

question 46

Multiple Choice

How are revenues and expenses recognized under the accrual basis of accounting?

• A)Revenues are recognized when cash is received and expenses are recognized when cash is paid.
• B)Revenues and expenses are recognized equally over a twelve month period.
• C)Revenues and expenses are recognized based on the choices of management.
• D)Revenues are recognized in the accounting period when the sale is made and expenses are recognized in the period in which they relate to the sale of the product.

---

Definitions:

Mutual Fund

An investment program funded by shareholders that trades in diversified holdings and is professionally managed.

Annual Management Fee

A charge by investment managers for managing assets, calculated as a percentage of the total assets under management annually.

Overtime Wages

Additional compensation paid to employees for hours worked beyond the standard working hours, typically at a higher rate.

Hourly Rate

The total compensation or income received per hour of employment.