The Accrual Basis of Accounting

What does the accrual basis of accounting record?

The accrual basis of accounting records _____.

The correct answer c) revenues when collected and expenses when incurred. The accrual foundation of accounting captures income as it is received and outlays as they are incurred.

According to the accrual accounting technique, revenue or expenses are recorded when a transaction takes place rather than when a payment is paid or received. The matching principle, which states that revenues and expenses should be recognised in the same period, is followed by the approach.

According to the accrual accounting system, revenue is recognised when it is earned and realisable, not necessarily when the money is actually received. Similar to revenue, expenses are also recorded in the same period as revenue rather than when the associated cash is paid.