BUSI 353 Study Guide - Working Capital, Interest Expense, Income Statement
Document Summary
Busi 353: securities laws and regulations (public companies) dictate the requirement for. Users (investors and creditors) _d_____________________________ it: accrual accounting. 2. 1 accrual accounting is necessary because if we relied only on a _c_____________ basis, then the timing/matching of events would not be in harmony. Example: if we sell goods on credit, the cash may be received 30 days after the sale transaction. However, the cost of goods sold would have already been paid for, so a cash basis accounting would be misleading to the users. 2. 2 definition of accrual accounting = a method of accounting that records economic events when they _h_________________________ rather than only when cash exchanges occur. We owe the money, though we don"t have to pay until later. We own the asset, though we have not paid for it yet. 2. 3 deferrals fall under the category of accrual accounting.
