Profit under accrual timing is subject to more distortion than cash flow from operations because of large accruals and deferrals that can impact reported profit.

Question

Quizplus · Accepted Answer

Accrual accounting involves recognizing revenues and expenses when they are earned or incurred, regardless of whether the associated cash has been received or paid. This can result in large accruals and deferrals that can impact reported profit. Cash flow from operations, on the other hand, focuses on the actual cash inflows and outflows of a business, providing a more reliable measure of its financial performance.

Profit Under Accrual Timing Is Subject to More Distortion Than