Generally accepted accounting principles (GAAP)require finance statements prepared on a cash basis because these statements are most useful for investors and managers.

Question

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GAAP requires financial statements to be prepared on an accrual basis, rather than on a cash basis, because it provides a more accurate picture of a company's financial performance and position. While cash basis statements may be useful in certain situations, they are not the preferred method for GAAP reporting.

Generally Accepted Accounting Principles (GAAP)require Finance Statements Prepared on a Cash