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?
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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?
Countless small businesses DO run just fine on a cash basis, but large companies need to know what expenses and income are not paid/received yet. Accrual gives a more accurate picture.
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