0
Why accrual-basis financial statements provide more useful information than cash-basis statements?
Wiki User
∙ 13y ago
Accrual basis accounting provide the reader with all of the exchanges a business has, even if they are made on account. A transaction made on account is comparable to someone paying with a credit card. If the business purchased $40,000 in equipment on account, you would see this in accrual basis account but it would not show up in cash basis accounting until the business paid off the account. If you read a cash basis accounting statement, you will only see the movement of cash, many business transactions aren't made with cash.
Both accrual basis and cash basis statements contain important information, but they simply different ways of showing the activities of a business.
Wiki User
∙ 13y ago
Wiki User
∙ 9y agoAccrual basis accounting provide more useful information because it uses the matching principle in which cost of one fiscal year is matched with revenues of the same fiscal year which is easy to understand and more accurate as all information related to one fiscal year is provided as a single statement.
Add your answer:
Earn +20 pts
Impact of finance on financial statements?
Finance are the reason for financial statements. Without financial information, financial statements can't be created. Investors use this information to make decisions about investing in a business.
What is misstate?
In financial statements a misstatement is a material misstatement if a user of the financial statements who places reliance on that information reaches at a wrong conclusion.
What is material misstatement?
In financial statements a misstatement is a material misstatement if a user of the financial statements who places reliance on that information reaches at a wrong conclusion.
What provide the necessary information to determine the liquidity of a company?
Financial Statements
Two financial statements are prepared from the information on the work sheet?
yes
Provide the necessary information to determine the liquidity of a company?
Financial statements
Which websites carry details on understanding financial statements?
You can find financial information at managementhelp.org/businessfinance/index.htm.
How might changing one of the financial statements affect the other financial statements?
How might changing one of the financial statements affect the other financial statements?
What financial information should a business plan contain?
financial statements (if the business has already been operating)budgetpricingprojections
What are limitations of financial management?
Financial Statements Are Derived from Historical Costs. ... Financial Statements Are Not Adjusted for Inflation. ... Financial Statements Do Not Contain Some Intangible Assets. ... Financial Statements Only Cover a Specific Period of Time. ... Financial Statements May Not Be Comparable. ... Financial Statements Could be Wrong Du
important of accounting information to shareholders?
Financial statements are important to investors because they can provide enormous information about a company's revenue, expenses, profitability, debt load, and the ability to meet its short-term and long-term financial obligations. There are three major financial statements.
Who is an internal user of financial statements?
Accounting information is presented to internal users in the form of management accounts, budgets, forecasts andÊfinancial statements. External users are communicated accounting information in the form of financial statements. These users are creditors, tax authorities, investors, etc..
