PRC-1 · Chapter 4 · Question 60 of 100
Similarly, why is it necessary for a business to formally account for accrued income?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) So that profit is not understated.
Explanation
Accrued income is revenue earned but not yet received. Failing to record it means revenue will be artificially low, which would cause the net profit to be understated.
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