Disadvantages Of Accrual Basis Accounting

The accounting cycle is the financial process starting recording business transactions and leading up to the preparations of financial statements. This process shows that the purpose of financial accounting is to show the financial information required in the form of general purpose financial statements. This process is to record transactions and detect expenditure and revenue to make this data by means of a financial information presented in the form of a balance sheet, income statement, and statement of owner 's equity and cash flow statement. Beginning with the transaction process and ends with the closing of the book. This process is repeated each reporting period. This process is known as the accounting cycle and includes key steps.

The

Accrual-basis accounting is under the basis of accounting. Revenues are reported at the income statements when they are earned. It happen before the cash money receiver from the client or customer. In the accrual basis expenses are reported on the income statement of the period. When they are expire which often in a period different from the payments is made. But the basis accounting the revenues are reported on the income statement in the period at which the cash is received from the client. The expenses cash basis accounting are reported on the income statement when the cash is paid out.

The disadvantages of accrual basis accounting is the income statement prepared under the accrual basis will report all of the revenues actually earned during the period and all of the expenses incurred in order to earn the revenue.

B. Going concern are fundamental accounting assumptions. The basic assumption in a company is that the company is still in continuous operation for a period of time that is able to provide its commitment. Concerns will provide some logic to the principle of cost. If the company does not plan to dissolve the company must report the asset for the long

Management accounting provides information relevant and useful to the business. Its purpose is to inform decision makers in designing a long-term strategic decisions as well as short-term decisions in business.

Types of users of financial information have two type it is internal and external. Internal users includes managements, employees, and owners. Management is analysing the organizations position and performance. They also taking appropriate measures to improve the company results. The employees is for assessing company profitability and its consequence on their job security. And the last owners, is analysing the ability and profitability of their investment.

The external users of accounting information is Creditors. Terms of credits are set assessment of their customer financial health. Next is Investors is for analysing the feasibility of investing in the company. Customer also one of external user. Customer for assessing the financial position of its suppliers which is necessary for them to maintain a stable source of supply at long term services. The lastly, regulatory authorised is ensuring the company disclosure of accounting information is accordance with the rules and regulations of protect the interest of