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What does the accruals principle state?
The accruals principle states that companies should recognize revenue in the financial statement when they
they should recognize expenses when they
V those expenses.
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that revenue, and



Answer :

Final answer:

The accrual principle states when revenue and expenses should be recognized in financial statements for accurate reporting.


Explanation:

The accruals principle states that companies should recognize revenue in the financial statement when they earn that revenue, and they should recognize expenses when they incur those expenses.

On the accrual basis of accounting, an organization records an expense when it receives a good or service, whether or not cash changes hands. This ensures that financial statements reflect the true financial position of the company.

Recognition concepts in accrual accounting focus on matching revenues with their related expenses to provide a more accurate representation of a company's financial performance.


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