Both the accrual basis and the cash basis of accounting increase the comparability of financial statement information from period to period.

Question

Quizplus · Accepted Answer

The accrual basis of accounting increases the comparability of financial statement information from period to period by recognizing revenues when earned and expenses when incurred, regardless of when cash is received or paid. In contrast, the cash basis of accounting, which recognizes revenues and expenses only when cash is received or paid, can lead to significant fluctuations in financial results from one period to another, reducing comparability.

Both the Accrual Basis and the Cash Basis of Accounting