What does accrual basis accounting assume regarding rent payments?

Accrual basis accounting operates on the principle that revenues and expenses are recorded when they are earned or incurred, regardless of when cash is actually exchanged. In the context of rent payments, this principle means that rent is recognized as income when it is due, not when the tenant actually pays it. This aligns with option B, which states that all rent is paid within the month due.

Under this accounting method, if a lease agreement specifies a rent payment due on the first of the month, that income is recorded as soon as it is due, regardless of whether the tenant has paid it. This approach provides a more accurate picture of a property’s financial performance over time, ensuring that financial statements reflect all income that is expected based on contractual agreements.

The other options do not accurately represent this accounting assumption. A vacancy rate may affect cash flow, but it is not an assumption of accrual accounting itself, rather, it is a factor in property management. Similarly, while consistent investment returns may be desirable, they are not a fundamental part of accrual accounting principles. Therefore, the focus on rent being recognized when it is due makes option B the correct choice.