💼 Pre-MBA Exam Prep

Accrual accounting differs from cash accounting because it:

A Only records cash transactions
B Records revenues when earned and expenses when incurred regardless of cash timing
C Is simpler
D Is used only by nonprofits

✓ Correct Answer: Option B

Accrual accounting: revenue recognized when earned, expenses recognized when incurred — not when cash changes hands. Required by GAAP for public companies.

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