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.

💡 Why is B) the correct answer?

The correct answer to the question "Accrual accounting differs from cash accounting because it:" is Option B: Records revenues when earned and expenses when incurred regardless of cash timing.

The other options — A) Only records cash transactions, C) Is simpler, D) Is used only by nonprofits — are incorrect for this Pre-MBA Exam Prep question. As explained above: Accrual accounting: revenue recognized when earned, expenses recognized when incurred — not when cash changes hands. Required by GAAP for public companies.

📚 About This Pre-MBA Exam Prep Practice Question

This 2-level Pre-MBA Exam Prep question from the Accounting topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free Pre-MBA Exam Prep practice test or use flashcards for spaced repetition review.

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Accrual accounting differs from cash accounting because it:

✓ Correct Answer: Option B

📚 About This Pre-MBA Exam Prep Practice Question

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