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Unformatted text preview: (2) the expense recognition principle o Cash basis accounting is not in conformity with GAAP Total net income will be the same under both cash-basis and accrual-basis in the end. The difference is in the timing of revenues and expenses. Weaknesses of Cash-Basis Accounting: o The cash basis does not recognize the aspects of the credit phenomenon o Accrual basis accounting aids in predicting future cash flows by reporting transactions and other events with cash consequences at the time the transactions and events occur, rather than when the cash is received or paid....
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This note was uploaded on 11/04/2009 for the course ACCT 327 taught by Professor Knight during the Spring '08 term at Texas A&M.
- Spring '08