Which of the following accounting methods accomplishes much of the matching of revenues and expenses?Multiple ChoiceCash accountingMatch accountingFull disclosure accountingAccrual accounting
Question
Which of the following accounting methods accomplishes much of the matching of revenues and expenses?Multiple ChoiceCash accountingMatch accountingFull disclosure accountingAccrual accounting
Solution
The accounting method that accomplishes much of the matching of revenues and expenses is Accrual accounting.
Here's why:
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Cash Accounting: This method records revenues when cash is received and expenses when they are actually paid. This method does not match revenues earned with money spent in a specific period. So, it's not the correct answer.
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Match Accounting: There's no such method in accounting known as 'Match Accounting'. So, it's not the correct answer.
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Full Disclosure Accounting: This is not an accounting method but a principle that requires a company to disclose all necessary information in its financial statements and other reports. So, it's not the correct answer.
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Accrual Accounting: This method records revenues and expenses when they are incurred, not when cash is exchanged. The purpose of accrual accounting is to match revenues and expenses in the correct accounting period. So, this is the correct answer.
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