Which of the Following Statements Is True in Regard to Accrual

question 44

Multiple Choice

Which of the following statements is true in regard to accrual accounting?

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

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Definitions:

Stockholders' Equity

The amount of capital given to a company by its shareholders, plus retained earnings or minus the company's accumulated losses.

Balance Sheet

A financial statement that provides a snapshot of a company's financial position, showing assets, liabilities, and equity at a specific point in time.

Common Stock

Common stock represents ownership shares in a corporation, providing voting rights and potential dividends to shareholders.

Earnings Per Share

A financial ratio that measures the amount of a company's profit allocated to each outstanding share of common stock, serving as an indicator of the company's profitability.