Asked by Adriana Vander Heyden on Jun 27, 2024
Verified
Accruals are needed when an unrecorded expense has been incurred or an unrecorded revenue has been earned.
Accruals
Accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when the cash transaction takes place.
Unrecorded Expense
An expense that has been incurred but not yet documented or reported in the accounting records.
Unrecorded Revenue
Revenue that has been earned but has not yet been documented in the accounting records.
- Understand the principles of accrual basis accounting.
- Identify and explain the different types of adjustments, including accruals and deferrals.
Verified Answer
VA
Virginia AguilarJul 02, 2024
Final Answer :
True
Explanation :
Accruals are used to recognize expenses that have been incurred but not yet recorded and revenues that have been earned but not yet recorded. This is necessary for accurate financial reporting and matching of expenses and revenues to the correct accounting period.
Learning Objectives
- Understand the principles of accrual basis accounting.
- Identify and explain the different types of adjustments, including accruals and deferrals.
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