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Case Study: Cash Spasis Or Accrual Basis?

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Case Study: Cash Basis 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…
(1985, December). Statement of Financial Accounting Concepts No. 6. [Pdf]
Retrieved from http://www.fasb.org/resources/ccurl/792/293/CON6.pdf
FASB (b). (n.d.). Summary of Statement No. 106. Retrieved from http://www.fasb.org/summary/stsum106.shtml FASB (c). (1972, April). APB 23: Accounting for Income Taxes—Special Areas [Pdf].
Retrieved from http://www.fasb.org/cs/BlobServer?blobcol=urldata&blobtable=MungoBlobs&blobkey=id&blobwhere=1175820901676&blobheader=application%2Fpdf
FASB (d). (1987, December). Summary of Statement No. 96. Retrieved from http://www.fasb.org/summary/stsum96.shtml FASB (e). (2008). Statement of Financial Accounting Standards No. 93. Retrieved from http://www.gasb.org/cs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1175820926217&blobheader=application%2Fpdf&blobheadername2=Content-Length&blobheadername1=Content-Disposition&blobheadervalue2=106342&blobheadervalue1=filename%3Daop_FAS93.pdf&blobcol=urldata&blobtable=MungoBlobs Kimball, T. (n.d.). How to Audit Cash-Basis Bookkeeping | Chron.com. Retrieved from http://smallbusiness.chron.com/audit-cashbasis-bookkeeping-62617.html Warren, C. S., Reeve, J. M., & Duchac, J. E. (2014). Financial and managerial

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