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What does the accruals principle state?

The accruals principle states that companies should recognize revenue in the financial statement when they [dropdown: earn it].

They should recognize expenses when they [dropdown: incur those expenses].

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Final answer:

The accruals principle dictates when revenue and expenses should be recognized in financial statements for accurate representation.


Explanation:

The accruals principle states that companies should recognize revenue in the financial statement when they earn it, not necessarily when cash is received. On the other hand, expenses should be recognized when they are incurred, matching them to the revenue they helped generate. This principle ensures a more accurate representation of a company's financial position.


Learn more about Accruals principle here:

https://brainly.com/question/32967564


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