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JAMB Principles of Accounts 1999 Question 1

Question 1

Accounting Concepts and Conventions

Accrual concept stipulates that

  1. A.revenue should be recognized when it is earned
  2. B.costs should be recognized when the expenditure is paid
  3. C.revenue should be recognized only when cash is paid
  4. D.costs should be recognized when they are incurred.
Show the answer and explanation

Answer: A (revenue should be recognized when it is earned)

Explanation

Under the accrual concept revenue is recorded when it is earned, whether or not cash has been received.