The accrual basis of accounting provides a better measure of economic performance than the cash basis.

Question

Quizplus · Accepted Answer

The accrual basis of accounting recognizes revenues and expenses when they are earned or incurred, regardless of when the cash is received or paid. This provides a more accurate picture of the company's economic performance as it includes all relevant transactions, even if cash has not yet been exchanged. The cash basis only recognizes revenues and expenses when cash is received or paid, which can result in distortions in a company's financial statements.

The Accrual Basis of Accounting Provides a Better Measure of Economic