Final answer:
Accrual basis accounting matches the income from the period and the expenses for the period in order to determine the net income or net loss for the period.
Step-by-step explanation:
The statement is true. Accrual basis accounting matches the income earned during a period with the expenses incurred to generate that income. This method of accounting recognizes revenue when it is earned, regardless of when the cash is received, and records expenses when they are incurred, regardless of when the cash is paid.
For example, if a company provides services to a customer in October but doesn't receive payment until November, under the accrual basis accounting, the revenue is recognized in October.
Accrual basis accounting gives a more accurate representation of a company's financial performance as it reflects the economic impact of transactions in the period they occur.