Which of the Following Statements Is True Regarding Accrual Accounting

question 19

Multiple Choice

Which of the following statements is true regarding accrual accounting?

• A)Revenue is recorded only when cash is collected.
• B)Expenses are recorded when they are incurred.
• C)Revenue is recorded in the period when it is earned.
• D)Revenue is recorded in the period when it is earned and expenses are recorded when they are incurred.

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Definitions:

Parent Company

The corporation owning all or a majority of the voting stock of the other corporation.

Voting Stock

Shares that grant the shareholder voting rights in corporate decisions, typically involving the election of the board of directors.

Interest Revenue

Income earned from investments, loans, or other earning assets that yield interest over time.

Cash Dividends

Payments made by a corporation to its shareholders, usually as a distribution of profits in the form of cash.