Aaron New Chapter 4 – Homework 4 June 7, 2010 Q1) It is to provide timely accounting information and so that users are able to make sound economic decisions. Q4) Matching principle is the concept that all costs and expenses incurred in generating revenues must be recognized in the same reporting period as the related revenues. Q5) Accural-basis accounting is a system of accounting in which revenues and expenses are recorded as they are earned and incurred, not necessarily when cash is received or paid. This also means that accrual-basis accounting will be more appropriate than most business because it shows what is happening in the company by bringing receivables and payables closer together relating business transactions with the business situation. This allows users to have a better picture of what is happening to the business. While cash-basis accounting is a system of accounting in which transactions are recorded and revenues and expenses are recognized only when cash is received or paid. This would not give
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This note was uploaded on 10/13/2011 for the course ACC 230 taught by Professor Staff during the Summer '10 term at Chandler-Gilbert Community College.