The accounting method that reports incomes when earned and expenses when incurred is called?

Answer Details

The accounting method that reports incomes when earned and expenses when incurred is called Accrual Accounting. Accrual accounting is a method of accounting where revenue and expenses are recognized as soon as they are earned or incurred, regardless of when the cash is received or paid. This method provides a more accurate picture of a company's financial performance by showing its financial activities in the period in which they occurred, rather than just the cash inflows and outflows. For example, if a company provides a service in January but does not receive payment until February, the revenue from that service would be recognized in January under the accrual method of accounting. In simple terms, Accrual accounting provides a broader view of a company's financial status by considering both its expected future cash inflows and outflows.