Question 45
WAEC_MODEL_QUESTIONS_VOL1
•
2018
•
FINANCIAL_ACCOUNTING
•
objective
State the accrual basis of accounting and give one example of a transaction that illustrates this concept.
Answer Options
Correct Answer
A.
Accrual basis records revenues when earned and expenses when incurred, irrespective of cash flow; e.g., recognising a sale on credit at the point of delivery.
B.
Accrual basis records revenues only when cash is received and expenses only when cash is paid, irrespective of when they are earned or incurred; e.g., recognising a sale on credit only when payment is received.
C.
Accrual basis records revenues and expenses only at the end of the fiscal year, irrespective of transaction dates; e.g., recognising a sale on credit at year‑end.
D.
Accrual basis records revenues when earned but expenses only when cash is paid, irrespective of when they are incurred; e.g., recognising a sale on credit at the point of delivery but delaying expense recognition until payment.
Correct Answer
A
Correct Option:
Accrual basis records revenues when earned and expenses when incurred, irrespective of cash flow; e.g., recognising a sale on credit at the point of delivery.
About This Question
This is
Waec Model Questions Vol1
2018
Financial Accounting
Question 45.
It is one of the
objective
questions from the
2018
Waec Model Questions Vol1
Financial Accounting
examination.
Difficulty level:
Easy
.