Why do we measure net income using accrual accounting rather than cash basis accounting? Group of answer choices It better reflects the efforts of the firm to produce a return to its owners. It plagues A201 students. Cash basis is too easy. It gives employment to accountants.
Why do we measure net income using accrual accounting rather than cash basis accounting? Group of answer choices It better reflects the efforts of the firm to produce a return to its owners. It plagues A201 students. Cash basis is too easy. It gives employment to accountants.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Why do we measure net income using accrual accounting rather than cash basis accounting?
Group of answer choices
It better reflects the efforts of the firm to produce a return to its owners.
It plagues A201 students.
Cash basis is too easy.
It gives employment to accountants.
Expert Solution
Step 1
Under cash basis of accounting all transaction records when actual expenses incurred or actual money received.
Under accrual method of accounting revenue records when sales or services renders we do not wait for actual payment and expenses recognise when incurred not when money spent.
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