Accrual Accounting

Question 1

What are the usual external Financial Reports (Annual Reports)?

Answer 1

Income Statement
Statement of Comprehensive Income
Balance Sheet
Statement of Changes in Owners’ Equity
Statement of Cash Flows
Footnote Disclosures and supplementary schedules
Auditor's Opinion

Question 2

GAAP, and therefore the financial statements, reflect the accrual basis of accounting rather than the cash basis of accounting

Answer 2

Note

Question 3

When is revenue recognized in Accrual Accounting?

Answer 3

Under the accrual basis, revenues are recognized when earned, regardless of the period of cash collection

Question 4

When are expenses recognized in Accrual Accounting?

Answer 4

Expenses are recognized when incurred, regardless of the period of cash payment

Question 5

When does Accrual Accounting recognized all resource changes?

Answer 5

When they occur

Question 6

When does Cash basis of Accounting recognized all resource changes?

Answer 6

it doesn’t, it limits the recognition of resource changes to cash flows

Question 7

What is Accrual Accounting?

Answer 7

it recognizes and reports the economic activities of the firm in the period the activity was incurred, regardless of when the cash activity takes place