Question

Which of the following is an advantage of accrual basis accounting?
A.
It allows you to track money that is owed but not yet paid.
B.
It means a business does not have to use receipts.
C.
It makes it easy to see a company’s cash flow
D.
It means a business doesn’t have to track every transaction.

Answer 1

@YoursTruly

Answer 2

Oh wow. I don't know the answer. ._.

Answer 3

Bad Molleh

Answer 4

I'm sorreh. *~*

Answer 5

All good hun

Answer 6

I'd go with either C or D. Leaning more to C.

Answer 7

Advantages of Accrual Basis Accounting


Accrual basis accounting is more popular than cash basis accounting because it produces more accurate, more faithful financial statements that constitute better representations of actual circumstances than its main competitor. Since accrual basis accounting records revenues and expenses together in the same time periods based on their causal relationships, it produces more accurate gauges of entities' performance in any time period. By contrast, the use of cash basis can lead to distortions due to the collection of cash and cash equivalents not aligning with the actual timing of sales.

Disadvantages of Accrual Basis Accounting


The single most important issue in accrual basis accounting is that it requires transactions to be recorded at the times of their occurrence. Since invoices do not coincide with actual events, this approach necessitates some estimation and guesswork on the part of accountants working under accrual basis accounting. Furthermore, an entire set of rules and regulations have grown up and around these uncertainties in order to guide their accounting, which means that accrual basis accounting is harder to perform than cash basis accounting.