When Are Revenues and Expenses Recognized in the Same Accounting

question 12

Multiple Choice

When are revenues and expenses recognized in the same accounting period that cash receipts and payments occur?

• A)under the cash basis of accounting
• B)under the accrual basis of accounting
• C)under the adjusting method of accounting
• D)under the finance method

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Definitions:

Opportunity Cost

The financial loss involved in not selecting the subsequent top preference during the decision-making process.

Cash Flow Estimate

An approximation of the amount of money expected to move in and out of a business within a specific time period.

Time Value of Money

Calculations involving the present and future values of money under the action of compound interest. Also called discounted cash flow.

Capital Budgeting Techniques

Methods used by companies to evaluate the profitability and financial feasibility of investment projects.