Which of the Following Is TRUE of Accrual Basis Accounting

question 38

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.

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Definitions:

Inventory Control System

A system used by businesses to manage their inventory levels, ensuring they have the right products in the right quantity for sale, at the right time.

Inventory Period

The average time it takes for a company to convert its inventory into sales.

Cash Flows

The net amount of cash and cash-equivalents being transferred into and out of a business.