The Accrual Method of Accounting Recognizes Revenue When ____,And Recognizes

question 67

Multiple Choice

The accrual method of accounting recognizes revenue when ____,and recognizes expenses when ____.

• A) they are earned;cash is paid
• B) cash is received;they are incurred
• C) they are earned;they are incurred
• D) cash is received;cash is paid

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Definitions:

Variable Costs

Expenses that vary in direct proportion to changes in activity levels or volumes, such as raw materials and direct labor costs.

Fixed Costs

Costs that remain constant in total regardless of changes in the activity level within a relevant range.

Fixed Costs

Costs that do not vary with the level of output or sales in the short term, such as lease payments, insurance, and salaries of permanent staff.

Variable Costs

Costs that change in proportion to the level of production or sales volume.