Practice question · Fill in the blanks
Complete the adjustment logic.
Accruals recognise economic events where cash moves ______. Deferrals spread economic recognition where cash moved ______.
Word bank: later · earlier · never · twice
Hints
- One pattern has the event first, the other has the cash first.
- Together they make the statements reflect economic reality.
Show the answer
Accruals recognise economic events where cash moves later. Deferrals spread economic recognition where cash moved earlier.
Why
Accrual: event now, cash later. Deferral: cash earlier, event spread over time. Together they make the income statement match economic reality.
Practise Adjusting Entries
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