Question

4. “Cash Basis of Accounting is not a better basis for depicting the correct
financial position of an enterprise." Do you agree? Give reasons in support of
your answer.
(Delhi 2018)​

Answer 1

Answer:

I disagree with the above statement because cash basis of accounting does not give a true and fair view of the profit and loss and the financial position of an enterprise because it ignores outstanding and prepaid expense and accured income and income received in advance.