Determine the integrity of a companys financial reporting

Assignment Help Accounting Basics

Reference no: EM133474191

Case: Accrual accounting is an accounting method where revenue or expenses are recorded when a transaction occurs vs. when payment is received or made. The cash-basis approach is easy to use in terms of cash-flow, but it often fails to provide a complete picture of a business's finances at times.

in Jay's case I would recommend accrual basis accounting because it lets you see a full picture of your business's finances. This is because you track receivables and payables rather than just money that has been deposited in or deducted from your accounts.

Revenue recognition principle is important because it directly determines the integrity of a company's financial reporting. it allows external entities, such as analysts and investors, to quickly compare the income statements of different companies in the same industry.

Reference no: EM133474191

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