The cash basis of accounting commonly results in financial statements that are less comparable from period to period than the accrual basis of accounting.

Question

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This is because the cash basis method only recognizes revenue and expenses when cash is received or paid, whereas the accrual basis method recognizes revenue and expenses when they are earned or incurred, regardless of when cash is actually received or paid. This can lead to variations in financial statements from period to period, making them less comparable.

The Cash Basis of Accounting Commonly Results in Financial Statements