Question

In accrual basis of accounting, recording is made of :

1)Credit transactions

2)Cash transactions

3)Both (a) and (b)

4)none of the above

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Answer 1

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Option C

Additional information:-

Accrual accounting is a method of accounting where revenues and expenses are recorded when they are earned, regardless of when the money is actually received or paid. For example, you would record revenue when a project is complete, rather than when you get paid. This method is more commonly used than the cash method.

Answer 2

In this question, we are asked to tell in accrual basis of accounting recording is made of-

• Option C is correct i.e. Both a and b.
• In accrual basis of accounting, recording is made of cash and credit transaction.
• In this system of accounting revenues and expenses are recorded when they are incurred regardless of when cash is received.
• For example -In a credit purchase, the purchase is entered into the books when the invoice is generated rather than when cash is paid.
• This method of accounting follows matching principle which says that record should be made in the year it is occurred.

PROJECT CODE #SPJ3