The Accrual Concept records:
AYear-end adjusting entries only
BOnly cash receipts and cash payments
COnly credit transactions
DBoth cash and credit transactions when revenues are earned or expenses incurred
Answer & Solution
Correct answer: D. Both cash and credit transactions when revenues are earned or expenses incurred
1. Per OCR: "The accrual concept is based on recognition of both cash and credit transactions."
2. Revenue need not equal cash receipts in a period.
3. Foundation for matching + accrual-basis accounting.
_Source: ICMAI BoS CMA Foundation Paper 2 (FFCA) — Paper2_07042026.pdf, Module 1 §1.2.2.1 (page 17)_