Question

According to accrual concept of accounting, financial or business transaction is recorded:

• A. When cash is received or paid
• B. When Transaction occurs
• C. When profit is computed
• D. When balance sheet is prepared

Answer 1

The correct option is B

When Transaction occurs

The concept in accrual basis of accounting is that accounting transactions should be recorded in the accounting periods when they actually occur i.e. when the transactions occur, rather than in the periods when there are cash flows associated with them.