Using the Accrual Basis of Accounting, a Company Recognizes Expenses

question 118

True/False

Using the accrual basis of accounting, a company recognizes expenses when they are paid.

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Definitions:

Unearned Revenues

Unearned revenues are payments received from customers before the company has provided goods or services, reflected as a liability on the balance sheet.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditures to the correct period.

Revenue Accounts

Accounts that track the income earned by a company from its normal business operations or other activities.

Salaries and Wages Payable

Obligations due to employees for completed work that hasn't been compensated yet.