Week 1 DQs - companies use the accrual-basis method of...

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What do the different financial statements tell you about a company? Income statements cover revenues and expenses along with the net income and losses of organizations for a specific period. A retained earnings statement summarizes the changes in retained earnings. A balance sheet reports the assets, liabilities and stockholders’ equity while cash flow statements cover receipts and payments. Which method of accounting, cash or accrual, is approved by GAAP? Why? The SEC requires all publicly traded companies to follow GAAP that means all publicly traded
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Unformatted text preview: companies use the accrual-basis method of accounting. Accrual-basis accounting provides an accurate account of how an organization is performing over the long-term. The cash method of accounting does not measure profit as well as the accrual method. What are debits and credits? Debits (Dr) is money that is flowing out of a company and are used in double entry system. Credits (Cr) represents money that is being made through sales or other means and is used in double entry system. Dr and Cr are used to check cash flow and balance budgets....
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