Final answer:
The statement is false; under the accrual method of accounting, expenses are recognized when they are incurred, which may not coincide with when revenue is earned. This method follows the matching principle, where expenses are matched with the revenues they help generate.
Step-by-step explanation:
The statement that expenses are recognized when revenue is earned is not entirely accurate in the context of the accrual accounting method. Under the accrual method of accounting, expenses are recognized when they are incurred, not necessarily when the revenue is earned. This means that expenses are recorded at the time the business receives the goods or services, or there is a cause for the expense, which could be before or after the associated revenue is recognized.
For example, a business may receive an invoice for services rendered in March, but not pay the invoice until April. Under the accrual method, the expense would be recognized in March when the service was provided, regardless of when the payment is made. This approach matches expenses to the revenues they help to generate, which is a core principle of accrual accounting known as the matching principle.