Heres my question,
Under the accrual basis of accounting:
-
net income is calculated by matching cash outflows against cash inflows.
-
cash must be received before revenue is recognized.
-
the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles.
-
events that change a company’s financial statements are recognized in the period they occur rather than in the period in which cash is paid or received.
Categories: