Comparing the Number of Days Purchases in Trade Payables with Prior

question 62

True/False

Comparing the number of days purchases in trade payables with prior years would provide persuasive evidence of accounts payable.

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Definitions:

Accrual Basis

An accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when cash transactions occur.

Revenue Recognition

Revenue recognition is the accounting principle governing when revenue is considered earned and can be recorded.

Expense Recognition Principle

An accounting principle that expenses should be recognized and recorded at the time they are incurred, not necessarily when cash is paid.

Recognition Principle

An accounting concept dictating that revenue should be recognized in the income statement when it is realized or realizable and earned, not necessarily when cash is received.