Final Answer:
Extronic, a calendar year, accrual basis corporation, recognizes income and expenses when earned or incurred, adhering to the accrual accounting method.
Step-by-step explanation:
Extronic operates as a calendar year corporation, meaning its financial activities align with the standard January to December calendar year. As an accrual basis entity, Extronic recognizes income and expenses when they are earned or incurred, regardless of when the cash transactions occur. This accounting method provides a more accurate depiction of the company's financial health, matching revenues with the expenses associated with generating them.
Accrual accounting contrasts with cash basis accounting, where transactions are recorded only when cash changes hands. In the case of Extronic, this means that revenue is recognized when products or services are delivered, and expenses are recorded when obligations are incurred. This approach offers a comprehensive view of the company's financial position, facilitating better decision-making and financial planning.