ABPS Administrative Medicine Practice Questions - ABPS Administrative Medicine Certification Examination Exam

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A hospital CFO is explaining the core difference between accrual and cash accounting. Which statement BEST describes accrual accounting?

Revenue is recognized when cash is received and expenses when cash is paid Revenue is recognized when earned and expenses when incurred, regardless of cash flow Only capital expenditures are recorded; operating expenses are ignored It is used exclusively for tax reporting, not for GAAP financial statements

Correct Answer:

Revenue is recognized when earned and expenses when incurred, regardless of cash flow

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