Question

write advantages and disadvantages of accrual basis of accounting
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Answer 1

Answer:

Advantages

Accrual accounting generally makes the relationships between revenue and expenses clearer, providing better insight into profitability. It also offers a more accurate picture of a company's assets and liabilities on its balance sheet.

Disadvantages

*Cash Flow Uncertainties. Accrual accounting requires that transactions be recorded when they occur rather than when money is exchanged. ...

*Difficult Calculations. The rules and regulations related to accrual accounting seem to be endless.

Explanation:

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Answer 2

Answer:

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Explanation:

Advantages of Accrual Accounting

Accrual accounting has several advantages, most of which are related to accurate income and expense reporting:

It provides an accurate picture of overall cash flow for the business. Many business transactions occur over a period of several months and therefore several accounting periods. Accrual accounting reflects that income and expenses generated in one month can carry over into the next month or even longer.

Investors prefer accrual accounting. A business that uses accrual accounting is often looked at as more permanent and established than businesses that use cash-basis accounting methods.

It's the preferred method for GAAP. The Generally Accepted Accounting Principles set forth by the Financial Accounting Standards Board prefers accrual accounting over cash-basis accounting because the financial statements for a business that uses accrual accounting are deemed more accurate since the transactions reflect when they actually took place instead of when money is exchanged.

Disadvantages of Accrual Accounting

There are some disadvantages to using the accrual accounting method, most of which revolve around the staff needed to maintain the system:

Small companies might lack the staff needed to manage this method. Larger companies typically have staff – even an entire department – dedicated to tracking and reporting transactions. For example, a hospital might have an account receivables department to keep track of patient billings, and an