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a. Cash is paid b. Expenses matches the revenues or used up
B
Option B
B
B. Expenses matches the revenues or used up
answer is B
B
Under the accrual basis of accounting, revenues are reported on the income statement when they are earned. (Under the cash basis of accounting, revenues are reported on the income statement when the cash is received.) Under the accrual basis of accounting, expenses are matched with the related revenues and/or are reported when the expense occurs, not when the cash is paid. The result of accrual accounting is an income statement that better measures the profitability of a company during a specific time period.
Expenses of two types The period and product period shall be recorded at the end of the year and shall be administrative, general and product related to the product and shall be payable at the time the product is sold
Under the accrual basis of accounting, revenues and expenses are recorded as soon as transactions occur. This process runs counter to the cash basis of accounting, where transactions are reported only when cash actually changes hands.
