Question

Which of the following is an example of an accrual? A : Record Revenues that were received in cash in an earlier period. B : Record Revenues that will be received in cash in a subsequent period. C : Record Wage Expense that is earned and paid in the same period. D : Record Rent Expense that was pre-paid

Answer 1

Answer:

The correct option is (b)

Explanation:

Accrual refers to income or expense that is accrued (service is delivered) but cash is not received in the current period. In accrual accounting, revenue is recorded at the time it is accrued irrespective of the time period it is received.

In this case, recording revenue that will be received in future is an example of accrual.