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ACCT 301- Research Paper.docx
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NOTES AND REFERENCES

Accounting Book p. 6-7

Cash basis and accrual accounting are models that produce a periodic measure of performance that could be used by investors and creditors for predicting future cash flows.

Cash basis accounting produces a measure called net operating cash flow which is the difference between cash receipts and cash disbursements from providing goods and services.

Operating cash flows may not be indicative of the company’s long-run cash-generating ability over short periods of time. 

Accrual accounting will get you a more accurate prediction of future operating cash flows and a more reasonable portrayal of the periodic operating performance of the company.  It doesn’t focus on only cash flows but revenues and expenses.

 

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