Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 4 - Accrual Accounting Concepts - Questions - Page 201: 24


(a) The accrual basis of accounting includes the transaction / events, in the periods in which the events occur, even if cash was not exchanged. (b) In the cash basis of accounting, the revenue is recorded when cash is received.

Work Step by Step

(a) In the same way, under the accrual basis, companies records the expenses when incurred, even if cash was not paid. (b) They record the expenses only when cash is paid. The cash basis of accounting is prohibited under generally accepted principles (GAPP)
Update this answer!

You can help us out by revising, improving and updating this answer.

Update this answer

After you claim an answer you’ll have 24 hours to send in a draft. An editor will review the submission and either publish your submission or provide feedback.