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Question
Name the accounting concept on the basis of which income statement is prepared ______________.
Name the accounting concept on the basis of which income statement is prepared ______________.
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Solution
The correct option is C Accrual concept
Under accrual basis of accounting, expenses are matched with the related revenues and/ or are reported when the expense occurs, not when the cash is paid. The result of accrual accounting is an income statement that better measures the profitability of a company during a specific time period.
Under accrual basis of accounting, expenses are matched with the related revenues and/ or are reported when the expense occurs, not when the cash is paid. The result of accrual accounting is an income statement that better measures the profitability of a company during a specific time period.
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