Gce Model Questions Vol1 2017 Financial Accounting Question 24

Practice objective / multiple choice question 24 from the 2017 Gce Model Questions Vol1 Financial Accounting examination.

Gce Model Questions Vol1 2017 Financial Accounting Objective / Multiple Choice Easy Difficulty
Question 24 GCE_MODEL_QUESTIONS_VOL1 • 2017 • FINANCIAL_ACCOUNTING • objective

State the accounting concept that requires revenue to be recognised when it is earned rather than when cash is received, and briefly explain why this concept is important for financial reporting.

Answer Options

Correct Answer A. Accruals (revenue‑recognition) concept - revenue is recorded when earned, ensuring that income and related expenses are matched in the correct period for reliable financial reporting.
B. Conservatism (revenue‑recognition) concept - revenue is recorded only when it is certain, ensuring that earnings are not overstated for reliable financial reporting.
C. Matching (revenue‑recognition) concept - revenue is recorded when expenses are incurred, ensuring that costs are matched with revenue for reliable financial reporting.
D. Cash (revenue‑recognition) concept - revenue is recorded when cash is received, ensuring cash flows are matched in the correct period for reliable financial reporting.
Correct Answer
A
Correct Option:
Accruals (revenue‑recognition) concept - revenue is recorded when earned, ensuring that income and related expenses are matched in the correct period for reliable financial reporting.

About This Question

This is Gce Model Questions Vol1 2017 Financial Accounting Question 24. It is one of the objective questions from the 2017 Gce Model Questions Vol1 Financial Accounting examination.

Difficulty level: Easy .

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