Under accrual-basis accountingA) cash must be received before revenue is recognized.B) net income is calculated by matching cash outflows against cash inflows.C) events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received.D) the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles.

Question

Under accrual-basis accountingA)  cash must be received before revenue is recognized.B)  net income is calculated by matching cash outflows against cash inflows.C)  events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received.D)  the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles.

Sabera Shaikh · Accepted Answer

Final Answer : C, Explanation :  Under accrual-basis accounting, events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received. This means that revenue is recognized when earned, even if cash has not yet been received, and expenses are recognized when incurred, even if cash has not yet been paid. This method provides a more accurate picture of a company's financial position and performance than cash-basis accounting.

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