Case Study: Cash Spasis Or Accrual Basis?
According to the FASB, “Accrual accounting and related concepts are therefore significant not only for defining elements of financial statements but also for understanding and considering other aspects of the conceptual framework for financial accounting and reporting” ((a), 1985, p. 44, para. 134). Warren, Reeve, and Duchac (2014) discuss that the accrual basis of accounting is required under the principles laid out by GAAP in the essence that “revenues are reported on the income statements in the period that they are earned,” and “expenses are reported in the same period as the revenues to which they relate” (p. 104). This would fall to the revenue recognition and matching principles because under cash basis accounting, the …show more content…
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