If cash flow prediction is a company's primary reporting objective, this would likely result in:
A) Higher earnings.
B) Lower earnings.
C) Poor matching.
D) Fewer accruals and deferrals.

Question

Quizplus · Accepted Answer

Accruals and deferrals are accounting methods that companies use to match revenues and expenses to the period in which they are incurred, rather than when cash is exchanged. If a company's primary reporting objective is cash flow prediction, it would likely focus less on accruals and deferrals, which are more about matching revenues and expenses to the correct periods, and more on the actual cash transactions, leading to fewer accruals and deferrals.

If Cash Flow Prediction Is a Company's Primary Reporting Objective