Question

Under which accounting method are revenues and expenses recognized in the same accounting period that cash receipts and payments occur?

a. under the accrual basis of accounting
b. under the direct write-off method of accounting
c. under the percentage of sales method of accounting
d. under the cash basis of accounting

Answer 1

Under the accrual basis of accounting, revenues, and expenses are recognized in the same accounting period that cash receipts and payments occur.

Step-by-step explanation:

The accounting method under which revenues and expenses are recognized in the same accounting period that cash receipts and payments occur is under the accrual basis of accounting.

Under the accrual basis, revenues are recognized when they are earned, regardless of when the cash is received, and expenses are recognized when they are incurred, regardless of when the cash is paid.

For example, if a company provides services to a customer in December but doesn't receive the payment until January, under the accrual basis, the revenue would be recognized in December when the services were provided.

Answer 2

D. under the cash basis of accounting