The FASB maintains that accrual accounting systems are more useful for predicting net cash flows than are simpler cash-based systems.

Question

Quizplus · Accepted Answer

Accrual accounting takes into account all transactions that have occurred, even if the cash has not been received or paid yet. This provides a more comprehensive picture of a company's financial position and potential future cash flows. Cash-based accounting, on the other hand, only records transactions when cash is received or paid, which may not accurately reflect a company's financial performance and future cash flows.

The FASB Maintains That Accrual Accounting Systems Are More Useful