I'm reviewing some homework and I don't understand this question or know what the correct answer is. Can anyone help with this? Accrual accounting: Multiple Choice

- is used for financial reporting purposes because it measures of a companys past earnings performance more accurately than does cash basis accounting.

- eliminates the need to record most of a companys liabilities.

- accounts for the economic effects of transactions when cash receipts or cash payments take place rather than when the resulting revenues are earned or expenses are incurred. Incorrect (got this one wrong)

- rarely if ever involves the use of estimates.