Income statements prepared using which basis provide the most information about future cash flows?
A)Actual basis
B)Cash basis
C)Historical basis
D)Accrual basis

Question

Quizplus · Accepted Answer

Income statements prepared using the accrual basis provide the most information about future cash flows because they recognize revenue when earned and expenses when incurred, regardless of when cash receipts or payments occur. This approach provides a more accurate depiction of a company's financial performance since it reflects economic reality, and can help predict future cash flows.

Income Statements Prepared Using Which Basis Provide the Most Information