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    amann's Avatar
    amann Posts: 1, Reputation: 1
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    #1

    Jun 23, 2011, 01:21 PM
    Why do you suppose financial statements are constructed on an accrual basis rather th
    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?
    joypulv's Avatar
    joypulv Posts: 21,591, Reputation: 2941
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    Jun 23, 2011, 03:07 PM
    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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