what is the accounting system where you record revenue when the business earns it,and expenses at the time the business incurs them?
(a)cash
(b)GAAP
(c)accrual
(d)COGS
my answer is
c
what is the time period called from the time the business opens to the last day of the twelfth month?
(a)inventory year
(b)business year
(c)fiscal year
(d)COGS
my answer is c
For the first question, the correct answer is (c) accrual. In the accrual accounting system, revenue is recorded when it is earned, regardless of when payment is received, and expenses are recorded when they are incurred, regardless of when payment is made.
For the second question, the correct answer is (c) fiscal year. The fiscal year refers to the time period from the day the business opens until the last day of the twelfth month, during which financial statements are prepared and reported.
For the first question, the accounting system where revenue is recorded when the business earns it and expenses are recorded at the time the business incurs them is called the accrual accounting system. To determine this, you can review the basic principles of accounting: the revenue recognition principle and the matching principle. The revenue recognition principle states that revenue should be recognized when it is earned, regardless of when it is received. The matching principle states that expenses should be recognized in the same period as the revenue that they help generate. Therefore, under the accrual accounting system, revenue and expenses are recorded when they are earned or incurred, respectively.
For the second question, the time period called from the time the business opens to the last day of the twelfth month is commonly known as the fiscal year. The fiscal year is not necessarily aligned with the calendar year (January to December). It is a 12-month period chosen by the business that best represents its operating cycle. This period is used for financial reporting and tax purposes. To determine this answer, you can refer to the definition and understanding of a fiscal year as the designated time frame for reporting financial information.