Which of the following is true of accrual basis accounting and cash basis accounting? A. Cash basis accounting records all transactions. B. Accrual accounting is not allowed under GAAP. C. Accrual accounting records revenue only when it is earned. D. All of the above are true.

Option C; ACCRUAL ACCOUNTING RECORDS REVENUE ONLY WHEN IT IS EARNED.

Explanation:

The main difference between accrual and cash basis accounting lies in the timing of when revenue and expenses are recognized.

Accrual accounting means revenue and expenses are recognized and recorded when they occur, while cash basis accounting means revenue and expenses aren't documented until cash exchanges hands.

Accrual accounting method records revenue when a product or service is delivered to a customer with the expectation that money will be paid in the future.

In accrual accounting method, revenue is accounted for when it is earned. Therefore, the option that best suits the question is option C; ACCRUAL ACCOUNTING RECORDS REVENUE ONLY WHEN IT IS EARNED.