Answered

Which of the following statements about accrual basis of accounting is false?
A. Companies record events that change their financial statements in the period in which events occur, even if cash was not exchanged.
B. Companies recognize revenue in the period in which the performance obligation is satisfied.
C. The basis is in accordance with generally accepted accounting principles
D. Companies record revenue only when they receive cash and record expense only when they pay out cash.

Answer :

Nyctalus

Answer: Companies record revenue only when they receive cash and record expense only when they pay out cash.

                                           

Explanation: Accrual basis is a means of reporting revenue-on-earned accounting transactions and expenditures as incurred.A key benefit of the accrual method is that it blends income with related costs so that the full impact of a commercial transaction could be seen in a specific review period.

Companies have to report their financial stamens in accordance with actuarial basis or they will not be certified by the auditors. Hence the correct option is D.

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