The cash basis of accounting commonly increases the comparability of financial statements from period to period.

Question

Quizplus · Accepted Answer

The cash basis of accounting only records transactions when cash is received or paid, which may result in incomplete and inaccurate financial statements. It does not account for accruals or other non-cash transactions, making it difficult to compare financial statements from different periods. The accrual basis of accounting, on the other hand, is generally considered to provide more accurate and reliable financial statements, although it may be more complex to apply.

The Cash Basis of Accounting Commonly Increases the Comparability of Financial