ICSAN Financial Accounting Practice Questions - ICSAN Professional Programme I - Financial Accounting Exam

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IAS 1 states that an entity must prepare its financial statements, except for cash flow information, using the accrual basis of accounting. What does this require regarding the recognition of elements?

Elements are recognized when cash is received or paid Transactions and events are recognized when they occur and are recorded in the periods to which they relate Revenue is recognized only when cash is received, but expenses are recognized when incurred Expenses are recognized only when cash is paid, but revenue is recognized when earned

Correct Answer:

Transactions and events are recognized when they occur and are recorded in the periods to which they relate

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