Difference between accrual-basis and cash-basis accounting

Reference no: EM131824049

Question: On numerous occasions, proposals have surfaced to put the federal government on the accrual basis of accounting. This is no small issue because if this basis were used, it would mean that billions in unrecorded liabilities would have to be booked and the federal deficit would increase substantially. Instructions

(a) What is the difference between accrual-basis accounting and cash-basis accounting?

(b) Comment on why politicians prefer a cash-basis accounting system over an accrualbasis system.

(c) Write a letter to your senators explaining why you think the federal government should adopt the accrual basis of accounting.

Reference no: EM131824049

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