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Businesses should therefore choose the most suitable accounting method. This paper prescribes the accrual basis of accounting over the cash basis.
There are several plus of using the accrual accounting method over the cash method. While the accrual method recognizes income and expenses in the immediate period, the cash basis recognizes income and expenses in relation to real-time cash flow. In fact, in the case of cash accounting, income is recorded when funds are received while expenses are recorded when paid rather than as they actually occur. The major advantage of accrual accounting over cash accounting is that it lays a great weight on the period in which expenses and incomes apply, whether money has changed hand or not (McQuaig et al). In this regard, the accrual system records the period in which money is earned instead of when payment is made as in the case of cash basis of accounting. That is, while payment may be made long after a job is completed, the accrual basis of accounting would recognize the period in which the work was done. The accrual method thus offers a clearer and more accurate picture on the long-term performance of a business compared to the cash basis (Palmer et al., 1999). The accrual method is also suggested for businesses that deal with inventory, be they small retailers to big
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The author states that the amounts for the assets are reported in accordance to prevailing average rates that were obtained from current market trends, such as land, building, etc. The tax expenses that reported are in the financial statement are based on the average taxations policy of the country that is subjected to change in times to come.
Student Name: Course: Instructor Name: Date of Submission: Financial Upheavals Financial crises are inevitable and seem to be a usual and reasonably invariant characteristic of such business cycle. The economic system of any country is subject to discrete business cycles that lie on the boom-depression continuum.
There are numerous driving and motivating factors that stimulated the implementation of the financial regulation. There are some driving forces that culminated the need of implementing financial regulations.
The third part presents an interpretation of the company’s income statement and the last part present interpretation of the balance sheet and the cash flow statement.
In order to comply with some provisions in the company law, the company prepares the financial
This policy assures a stable rate for ten years duration in life. However, one is not hooked to the system until the end of the ten-year but is free to terminate the premium at any given time without penalty by terminating the premium payment ( Fedorowicz,
Option 3 has the most impact in terms of development density as its profit dropped 16.31% from the originally projected profits (estimated at 48.14%). Its profit is still higher than Option 2 while Option 1 has the highest projected profit. Option 2 has an estimated 16.15% drop in profits and is the lowest among the three options considered.
In this paper, I will try to explore the different roles of financial institutions to individuals and businesses. After which, I shall highlight the importance of financial tools and methods such as forecasting by taking the hypothetical role of manager of the high school division of Abel Athletics.
So if the financial statements are used by any specific entity for its purpose, then the financial information provided in the financial statement can be used rather in a different way. Normally, if the financial statements are meant for general purposes,
can be supposed to be the attributing factors towards the development of financial innovation. Innovations are mainly done to achieve the basic objectives of financial systems like facilitating the required payment instruments, increased savings, reduction in costs, etc.
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