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    Question

    Accrual concept of accounting

    requires:
    A Recording revenue when cash is received Correct Answer Incorrect Answer
    B Recording expenses when cash is paid Correct Answer Incorrect Answer
    C Recording transactions when they are incurred, not when cash is exchanged Correct Answer Incorrect Answer
    D Matching assets with liabilities Correct Answer Incorrect Answer
    E Preparing financial statements annually Correct Answer Incorrect Answer

    Solution

    The Accrual Concept states that transactions are recorded in the books of accounts when they occur (i.e., revenue when earned, expenses when incurred), regardless of when the related cash is received or paid. This is the opposite of cash-based accounting (A and B).

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