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Under the accrual basis of accounting, when is revenue recognised?

  1. A When cash is received
  2. B When it is earned, regardless of when cash is received
  3. C At the end of the financial year
  4. D When the invoice is paid in full
Answer

When it is earned, regardless of when cash is received

Accrual accounting recognises revenue when it is earned and expenses when incurred. Cash basis recognises both only on cash movement, which is why the two produce different profit figures.

All Accounting MCQs

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