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Using Accrual Accounting to Make Financial Statements More Useful

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

What method of accounting reports revenue when it is earned and expenses when they are incurred regardless of when revenue is received or expenses paid?

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1. Which principle recognizes revenue when it is earned regardless of how cash flows?

2. Which principle states that any costs associated with doing business should be recorded in the same period as the revenue that those costs help generate?

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About This Quiz & Worksheet

This quiz and corresponding worksheet will help you gauge your knowledge of the accrual accounting method. Topics you'll need to know to pass the quiz include understanding the types of financial statements as well as knowing the characteristics of the accrual accounting system.

Quiz & Worksheet Goals

Use these assessments to review:

  • Types of financial statements
  • Characteristics of the accrual method
  • Names of principles associated with the accrual method
  • What provides financial data to show how well a company is doing

Skills Practiced

This worksheet and quiz will let you practice the following skills:

  • Interpreting information - verify you can read information regarding principles of accounting and interpret it correctly
  • Knowledge application - use your knowledge to answer questions about the types of financial statements
  • Reading comprehension - ensure that you draw the most important information from the related accrual accounting lesson

Additional Learning

To learn more about accounting methods, review the corresponding lesson called Using Accrual Accounting to Make Financial Statements More Useful. This lesson will help you:

  • Understand what the accrual basis of accounting is
  • Describe the role of the revenue recognition principle
  • Identify the four types of reports in an accounting department
  • Explain how revenues and expenses are accounted for
  • Appreciate how to make financial statements as accurate as possible
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