Which of the Following Is True of Accrual Basis Accounting

question 64

Multiple Choice

Which of the following is true of accrual basis accounting?

• A) Expenses are recognized either when they are incurred or cash is paid.
• B) Revenue is recognized when a customer pays cash.
• C) Expenses are recognized when they are incurred.
• D) Revenue is recognized when a customer pays cash or shows interest to purchase the product or service.

---

Definitions:

Bursa

A small fluid-filled sac located near joints that reduces friction between tissues, such as bone and tendons.

Fluid

A substance that has no fixed shape and yields easily to external pressure; a gas or (especially) a liquid.

Joint

The point at which two bones are connected, allowing for movement and support.

Contracture

An abnormal tightening or shortening, often resulting in a deformity.