Why do you suppose financial statements are constructed on an accrual basis rather than cash basis when cash accounting is so much easier to understand.

Why do you suppose financial statements are constructed on an accrual basis rather than a cash basis when cash accounting is so much easier to understand?

What does it mean when cash flow from operations on a company's cash flow statement is negative? Is this bad news? Is it dangerous?

Is a company better or worse off when the market value of its liabilities fall? Why?

If you owned a company, would you prefer the market value of its liabilities fall? Why?

Explain briefly how each of the following transactions would affect a company's balance sheet. (Remember, assets must equal liabilities plus owners' aquity before and after the transaction)
a. Purchase of a new $10 million building, financed 20 percent with cash and 80 percent with a bank loan.
b. Purchase of a new building for $10 million cash
c. A $10,000 payment to trade creditors
d. Sale of $100,000 of merchandise for cash
e. Sale of $100,000 of merchandise for credit

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If you are relating to me. I have no assignment like this. I came across these questions while reading some material on financing. I have long passed the age of having to conduct assignments for classes.

Cash basis accounting is fine for small business. The large the company gets, the more money is hanging in limbo, not paid out yet and not received yet. Hence, accrual.

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Originally Posted by herman11

If you are relating to me. I have no assignment like this. I came across these questions while reading some material on financing. I have long passed the age of having to conduct assignments for classes.

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If that's the case why did you spam post SIX separate threads with ZERO indication of your own thought process..