Accounting 212

Chapter 3 Textbook Exercises ACC 280 Chapter 3 Textbook Exercises - E3-2 (a) What is the difference amidst assemblage- empennage be and cash- priming chronicle? The difference between accrual- flat coat bill and cash-based report is timing that grosss and expenses are recognized. In accrual- foot accounting, the revenues are enter in the periods in which they are earned and expenses are save in the periods in which they are realized. In cash- buttocks accounting, the revenues are enter in the period they are authorized and expenses are enter in the period they are paid. Accrual-basis accounting is authoritative by generally accepted accounting principles because they match revenues to expenses, giving the financial reports more(prenominal) than signifi passelce. The accrual-basis method is more complicating and expensive to apply, however, accrual basis accounting provides a more dead-on(prenominal) picture of how a backing is performing every where the long-term than the cash method (INC, 2008). Cash-basis accounting is less conglomerate to use, but it does not give an accurate measure of profits. This leave out of information can be critical to managers when they are qualification significant financial decisions for the company. (b) why would politicians pick out the cash basis over the accrual basis?

It has been said that when politicians are bear on with accounting they would prefer the cash basis over the accrual basis. The cash basis is used for smaller companies when they record revenue after they run across the cash and pay out cash, t hat can be hugely misleading for the financ! ial statements (Weygandt, Kimmel, & Kieso, 2008). This is because multiple minutes can be posted in one period to make a company seem more productive than it is. The accrual basis is accepted by the GAAP because it project how well the larger companies financial status is doing, to where the cash basis is not accepted by the GAAP, because the revenue is not being recorded in which the cash it not being received (Weygandt,...If you want to make grow a full essay, order it on our website: BestEssayCheap.com

If you want to get a full essay, visit our page: cheap essay