Question

Accrual accounting is used because
A) it provides a better indication of ability to generate cash flows than the cash basis.
B) it recognizes revenues when cash is received and expenses when cash is paid.
C) cash flows are considered less important.
D) All of the above

Answer 1

What is Accrual Accounting?

A method of recording the expenses and revenues when cash is exchanged and it has incurred is known as Accrual Accounting. Accrual accounting is used to record the revenues and expenses that were generated during a cashless transaction.

So the correct answer to your question is option (D)

It is All the above.

Accrual Accounting will provide a better indication of ability to generate cash flow than the cash basis. It recognizes revenue when the cash is received and expenses when cash is paid. In accrual accounting, cash flows are considered less important.