ACC 225 WEEK 3 DQ 1 - Why do accrual basis financial...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Week 3 Discussion Question 1 · Due Date: Day 2 [Main] forum · Post your response to the following: o What is the difference between cash basis and accrual basis accounting? o Why do accrual-basis financial statements provide more useful information than cash-basis financial statements? o Describe when each method (cash basis and accrual basis accounting) would be appropriate to use.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
What is the difference between cash basis and accrual basis accounting? Under the accrual basis of accounting, revenues are reported on the income statement when they are earned. Under the cash basis of accounting, revenues are reported on the income statement when the cash is received. Under the accrual basis of accounting, expenses are matched with the related revenues and/or are reported when the expense occurs, not when the cash is paid.
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Why do accrual basis financial statements provide more useful information than cash basis financial statements? The result of accrual accounting are income statement that better measures the profitability of a company during a specific time period; and a balance sheet that better shows the financial condition of the company. Describe when each method (cash basis and accrual basis accounting) would be appropriate to use. Revenues and costs are recognised as they are earned or incurred under the accrual basis of accounting. This aids the assessment of the entity's performance and financial position. The cash basis of accounting should only be used for cash flow information....
View Full Document

This note was uploaded on 10/17/2011 for the course ACC 225 acc 225 taught by Professor Unknown during the Spring '10 term at University of Phoenix.

Page1 / 2

ACC 225 WEEK 3 DQ 1 - Why do accrual basis financial...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online