An Important Fact Related to Accrual Accounting Is That

question 146

Multiple Choice

An important fact related to accrual accounting is that:

• A)adjusting entries are not required.
• B)revenue is recorded when cash is received.
• C)expenses are recorded when incurred.
• D)revenue is recorded when cash is received and expenses are recorded when incurred.

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Definitions:

Shelter Principle

A legal rule in property law that protects the rights of a subsequent purchaser if the initial transfer to the seller was valid.

Status

The legal condition or position of an individual or entity in relation to others or the law.

Good Faith

An expectation for parties to act honestly and not mislead or deceive each other in a contract.

Holder in Due Course

A legal term referring to a party who has acquired a negotiable instrument in good faith and without notice of any defects.