GB 518 Course Great Wisdom / tutorialrank.com GB 518 Course Great Wisdom / tutorialrank.com | Page 6

To determine the appropriate dividend amount

In some situations to replace the income
statement

To replace the retained earnings account in
some businesses

Question 10. Question :

The accrual basis of accounting:

Is generally accepted for external reporting since
it is more useful for most business decisions
Is flawed because it gives complete information
about cash flows
Recognizes revenues when received in cash

Recognizes expenses when paid in cash

Eliminates the need for adjusting entries at the
end of each period