Week 1 Discussion 2 - Judgment Case 2-1 1. Explain the...

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Judgment Case 2-1 1. Explain the differences between cash basis and accrual basis as a measurement of performance. The difference between cash basis and accrual basis as a measurement of performance is cash basis measures only cash receipts and disbursements when the cash is actually moved regardless of when the transaction happens. For example if an item is sold on account in January but paid in April it will not be on record until April. Cash also has no Accounts Payable, Accounts Receivable, etc. Accrual basis best predicts future cash flows. Accrual basis measures the accomplishments and resource usage regardless if there was a cash transaction and does have Accounts Payables and Receivables. 2. Why does accrual basis net income provide a better measure of performance then net operating cash flow? Net Income provides a better measure of performance then net operating cash flow because it shows upcoming events like what needs to be paid and monies that will be received. Net operation cash flows only shows what is actually happening with cash and not what is expected. Net Income allows you to know exactly what you are worth.
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Week 1 Discussion 2 - Judgment Case 2-1 1. Explain the...

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