Answered: e cash bas

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Q2. Would AT&T (T) and Microsoft (MSFT) use the cash basis or the accrual basis of accounting? Explain.

Expert Solution

Step 1

The primary goal of an enterprise in selecting accounting policies must be that the financial statements created and presented on the basis of such accounting policies provide an accurate and fair assessment of the enterprise's state of affairs as of the balance sheet.

Cash basis focuses on the reception and payment aspects of the company.

Accrual foundation focuses on the operations aspect of the business and employs the matching idea to provide a genuine and fair representation of the accounts.

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