Question

The accrual method of accounting can be best described as a. the method that recognizes revenue when money is received. b. the recording of transactions and events so that debits equal credits. c. the method that aligns revenues and expenses with the appropriate period in which resources are generated and consumed. d. the method that equates assets with liabilities and owners' equity.

Answer 1

Answer:

The correct answer is c. the method that aligns revenues and expenses with the appropriate period in which resources are generated and consumed.

Explanation:

Accrual basis is the accounting method by which transactions and other events are recognized when they occur (and not when their collection or payment is made in cash or its equivalent). Therefore, transactions and other events are recorded in the accounting books and are recognized in the financial statements of the periods with which they are related. The elements recognized according to the accrual accounting basis (or accrual) are: assets, liabilities, net assets / equity and ordinary income / resources and expenses.