Reported accrual accounting net income for a period always provides an accurate picture of underlying economic performance.

Question

Quizplus · Accepted Answer

Reported accrual accounting net income for a period may not always provide an accurate picture of underlying economic performance because it depends on various assumptions such as depreciation, amortization, and allowance for bad debts. Also, it does not account for cash transactions, which can significantly affect a company's financial position. Therefore, it should be analyzed in conjunction with other financial metrics to get a holistic view of a company's performance.

Reported Accrual Accounting Net Income for a Period Always Provides