Abstract
A brief review of the differences between cash-basis financial accounting and accrual-basis financial accounting. Differences between accountants and financial managers regarding treatment of cash are also discussed.

From the Paper
"This paper compares and contrasts cash-basis financial accounting and accrual-basis accounting. Additionally, differences between accountants and financial managers with respect to the treatment of cash are considered.
"The conceptual difference between cash-basis financial accounting and accrual-basis financial accounting centers on the recognition of income and expenses. Within this context, a differentiation is made in accrual-basis financial accounting between a) income and expenses and b) receipts and disbursements."

Tags:Cash-basis, financial manager, accountant, Accrual-basis

Abstract
This paper focuses on the use of accounting on an accrual basis. The paper explains that the National Research Council (NRC) uses the accrual basis for accounting since under accrual accounting, the company record revenues when they are earned, and records expenses in the accounting period which they are incurred. Also, income is reported in the time period it was earned, irrespective of the when the revenue was received by the NRC.

From the Paper
"The National Research Council (NRC) uses the accrual basis for accounting since under accrual accounting, the company record revenues when they are earned, and records expenses in the accounting period which they are incurred. Also, income is reported in the time period it was earned, irrespective of the when the revenue was received by the NRC. The major benefits from this practice stem from the fact that:- * The accrual basis complies with GAAP procedures. * Accrual basis provides a more adequate picture of profitability, which may help with long-term planning and forecasting."

Tags:receivable, CAAP, profitability, implementation

Abstract
This paper explains that, in cash basis or cash accounting, businesses record transactions only if they involve the payment or receipt of cash, which does a poor job of matching revenues earned with money laid out for expenses. The author points out that, in accrual accounting, the economic impact of a transaction is recorded whether or not the transaction involves cash, which does a better job of matching revenues with expenses and of handling items such as property and equipment. The paper relates that the four statements used in the accrual method accounting are the balance sheet, the income statement, the statement of cash flows and the statement of stockholders' equity.

From the Paper
"An example would be a purchase of supplies in July but the supplies are not sold until August. You receive the cash in August. However, when the books are closed all you have to show for July is an expense for supplies but no revenue to offset it, meaning there is a loss for that month. This can make it difficult for a business to determine whether or not it is earning a profit because all its business activity does not always fall on the same month. It also has trouble tracking anything other than cash. For example if you purchased equipment or property the cash method of accounting would show the purchase and disbursement in the month of purchase. These items, however, will be used over a period of time."

Tags:transaction, impact, revenue, statement, equity

Abstract
This paper defines and compares two concepts in accounting - the cash basis and the accrual basis. It shows that the cash basis of accounting is more likely to be used by service businesses than by retail or manufacturing businesses. The paper also provides an example in table form to show the differences between the two systems.

From the Paper
"In short, under the cash method, a business reports income when it is received and reports expenses when cash is disbursed. Under the accrual method, a business reports income when the business has the right to receive the income and reports expenses when all events, which create the liability, have occurred and the amount of the expense is reasonably determinable."

Tags:disbursement, equity

Abstract
The paper attempts to provide a brief overview of the hierarchy of various sources of generally accepted accounting principles, the relevance of qualitative characteristic of accounting information, the differences between accrual accounting and cash accounting and finally the characteristics of various business legal forms. The paper also discusses how even though successful companies can go bankrupt, investors can lose their investment and employees can end up unemployed, the accounting profession's responsibility is to address the concerns of various stakeholders and restore the confidence in financial reporting by improving the quality of financial information.

From the Paper
"Business practices and accounting rules have undergone significant evolution to cope with the complexity of today's economic and social environment. Changes in the nature of the businesses required new business forms attractive to entrepreneurs. The constant sophistication of business practices, emerging new economic and social trends were followed by the attempts of regulators and standard setters to regulate the economy and increase transparency of financial reporting. The recent accounting scandals which made Enron and WorldCom household names demonstrated the importance of understanding the accounting rules role in preparing in financial reporting."

Tags:GAAP, accrual, accrual

Abstract
This paper discusses each of the following terms, expands on the definition, and explains why the concept is important to financial statements. The terms include Generally Accepted Accounting Principles (GAAP), Historical Cost, Accrual Basis vs. Cash Basis Accounting, and Current Assets and Liabilities vs. Non-Current Items. The paper locates the balance sheet, income statement, and statement of cash flows for Ford, Exxon-Mobil, and Microsoft. The paper examines whether net income or cash from operating activities is more useful for each of these companies.

From the Paper
"The GAAP are not rules set in stone; rather, they are guidelines, or you might call them a group of objectives and conventions "that have evolved over time to govern how financial statements are prepared and presented," according to www.allbusiness.com. Theses principles are set by the Financial Accounting Standards Board (FASB), and the Securities and Exchange Commission (SEC) also provides input and guidance regarding the amendments to acceptable accounting practices. The GAAP serves as a guiding light for every business: when an accountant from outside the company is looking into its financial data and record-keeping, the company expects that accountant to be using GAAP. "Compliance with GAAP helps maintain creditability with creditors and stockholders," AllBusiness.com explains, "because it reassures outsiders that a company's financial reports accurately portray its financial position.""

Tags:financial, statements, reports

Abstract
This paper provides a memo from an accountant; "As you know, my services were retained by you to prepare a forecast budget based on estimated information for your proposed enterprise Statements Media. The attached Excel spreadsheet includes informative financial data that you both should refer to as part of this memo. The Balance Sheet as noted on the Excel tab reflects the disposition of the investment funds - your personal investment of $10,000 and the bank credit line of $25,000 -as of May 1, 2009, and is straightforward in its presentation. Please note that future financial statements will be presented on an accrual basis of accounting to better match revenue with expenses."

From the Paper
"To: Mssrs. Adam Watson and Joseph Magnotta Statements Media From: Trusted business accountant and consultant Subject: FINANCIAL INFORMATION INCLUDING ANNUAL BUDGETS BASED UPON VARIOUS OPERATION FORMATS AND OPTIONS. As you know, my services were retained by you to prepare a forecast budget based on estimated information for your proposed enterprise Statements Media."

Tags:budget, case, study

Abstract
This paper explains that the American International Group--AIG, the world's largest insurer--was reported to have arranged deals to manipulate financial figure in its own records and those of General Re, a reinsurance company, resulting in financial fraud during the autumn of 2000. The author points out that AIG also was involved in another accounting fraud with Brightpoint Inc., which was reported by the Securities and Exchange Commission in 2003; AIG worked closely with the Brightpoint people to tailor an alleged insurance policy that let Brightpoint overstate its earnings by an amazing 61% in a cash circulation deal from Brightpoint to AIG and again back to Brightpoint. The paper defines receivables are monies due from the customers, which are tallied by invoices and happen due to operating cycle's process of selling inventory or services on terms that permit delivery before cash is collected.

Table of Contents
The General Re Fraud
The Brightpoint Fraud
Cash & Accrual Basis of Accounting
Receivables and Inventory
Fixed and Intangible Assets
Liability & Stockholders Equity

From the Paper
"Under the cash method of accounting, the books are maintained on the actual cash flow. Income is recorded on its receipt and expenses enter the books on their actual payment. Whereas majority of the businesses use the accrual basis, the most correct method for the company depends on the sales volume, credit policy of the company and business structure. In case of the accrual method, income & expenses are recorded while they occur, notwithstanding whether there has been exchange of cash and an example of this is sale on credit. Accrual method is appropriate when the annual sales are more than $5 million and the business is a corporate organization. Besides, it is suggested that while selling on credit, matching of income and expenses during a given period must be done."

Tags:cash-circulation, invoices, cash-method, reserves, equity

Abstract
This paper explains that expenses are recognized in the same period in which the benefits derived from those costs are recognized (the matching principle) and, thus, recognition of expenses is dictated by revenue recognition; therefore, associations between revenues and costs must be established. The author points out the pros of expensing options include providing a level playing field so that companies, which use cash bonuses, and companies, which use stock options, each have an expense on the income statement; however, there are many significant challenges for a company that expenses options. The paper recommends that manufacturing companies use accrual basis accounting and follow GAAP guidelines for revenue and expense recognition and, with regards to expensing stock options, the company might explore the use of stock awards instead of stock options.

Table of Contents
Introduction
Revenue and Expense Recognition Methods
Expensing of Stock Options
Recommendations

From the Paper
"The revenue recognition and matching principles mentioned above are used under the accrual basis of accounting. Under cash-basis accounting, revenue is recorded only when cash is received, and expenses are recorded only when paid. However, GAAP requires accrual basis accounting because the cash basis often causes misleading financial statements. With accrual basis, revenue must be recognized in the accounting period in which it is earned, not just when money is exchanged."

Tags:period, benefits, matching, bonus, gaap

Abstract
This paper examines accounting according to the Generally Accepted Accounting Principles or GAAP. Some topics such as historical costs and accrual versus cash basis accounting are examined. Finally, a series of companies' financial statements are briefly discussed in order to identify important accounting practices.

From the Paper
"This document examines accounting according to the Generally Accepted Accounting Principles or GAAP. Some topics such as historical costs and accrual versus cash basis accounting are examined. Finally, a series of companies' financial statements are briefly discussed in order to identify important accounting practices. Accounting is the most basic language employed to explain business and its..."

Tags:accounting, financial, statements