Question

multiple select question
select all that apply
which of the following statements describes why accrual accounting better reflects a businesss performance? choose every correct answer.
revenues are always recorded in the period in which they are earned.
comparability of financial statements is improved.
it provides a better focus and understanding of how cash is spent and why it is received.
expenses are always recognized in the period in which they are incurred.
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Explanation:

Accrual accounting follows the revenue recognition and matching principles: revenues are recorded when earned, expenses when incurred, which aligns performance measurement with the actual timing of business activities. This consistent application across periods also improves the comparability of financial statements. The statement about cash flow focus describes cash basis accounting, not accrual accounting.

Answer:

A. Revenues are always recorded in the period in which they are earned.
B. Comparability of financial statements is improved.
D. Expenses are always recognized in the period in which they are incurred.