Generally, accrual basis accounting results in a more accurate measurement of profit the period than does cash basis accounting.

Question

Quizplus · Accepted Answer

Accrual basis accounting records revenue and expenses when they are earned/incurred, regardless of when cash is received/paid, resulting in a more accurate measurement of profit for the period. Cash basis accounting only records revenue and expenses when cash is received/paid, which may not reflect the true profit for the period.

Generally, Accrual Basis Accounting Results in a More Accurate Measurement