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This post addresses accrual basis accounting.

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Publicly traded firms are required to report to the investors using an accrual not a cash-basis approach. Do you think they should? What are the advantages? The drawbacks?

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Solution Summary

The solution provides a detailed discussion examining the benefits and drawbacks of accrual basis accounting, compared to cash-basis accounting. This solution is written based on 25+ years of professional accounting experience.

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I definitely think they should use the accrual approach. By doing so, it gives investors a more clear picture of how the company is doing presently, and most importantly, if the company is generating a profit. By matching income to expenses under the accrual method, we're showing the true ...

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