The Purpose of the Accrual Basis of Accounting Is To

question 89

Multiple Choice

The purpose of the accrual basis of accounting is to:

• A) report revenue when received.
• B) improve the matching of revenue and expense in the proper period.
• C) report expenses when cash disbursements are made.
• D) improve the company's earnings per share.

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Definitions:

Assumed Investment Rate

The hypothesized annual rate of return expected from an investment used in financial planning and projections.

Annuity Cost

The initial sum paid or the series of periodic payments required to obtain an annuity.

Return On Investment

A measure used to evaluate the efficiency of an investment, calculated by dividing the benefit (return) of an investment by its cost.

Nearest Hundred Thousand

A rounding method where a number is rounded to the closest increment of one hundred thousand.