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    This posting addresses an accrual not a cash-basis approach

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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?

    © BrainMass Inc. brainmass.com October 10, 2019, 2:51 am ad1c9bdddf
    https://brainmass.com/economics/risk-analysis/accrual-not-cash-basis-approach-397171

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    I definitely think they should. Under an accrual based accounting system, the financial statements, which are compiled primarily for investor use, contain more information than if using a cash accounting system. The more information the investor has is better, as they can then base their investment decisions on that information. By using an accrual reporting system, investors can gain a better, more in-depth scope of where resources were allocated to, and can perform an in-depth ...

    Solution Summary

    The solution provides a detailed discussion on the advantages and drawbacks of the requirement that companies must report to the investors using an accrual not a cash-basis approach.

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