What is income statement preparation preference and why

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problem 1: If you were an investor in a rent-to-own business that takes more than a year to collect revenues while the customers take immediate possession of the goods: Would you prefer to have the income statement prepared by cash basis or by accrual basis and why?

problem 2: If you were an investor of a construction company with projects that take more than a year to complete, what is your income statement preparation preference and why? If you choose the accrual basis, what can shareholders do to ensure the appropriate use of accruals?

Reference no: EM132782622

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