Questions -
1. Explain the difference between the cash basis, modified cash basis, and the accrual basis measure of performance. Provide examples of accounts that are treated differently under the three methods. Be sure to review the related PowerPoint Presentation in the Week 3 Online Presentations folder!
2. Why, in most cases, does accrual basis net income provide a better measure of performance than cash basis net income?
3. Explain the purpose of adjusting entries as they relate to the difference between cash and accrual accounting. Which generally accepted accounting principle (GAAP) rule does accrual accounting fulfill?