Week Three Discussion Questions
- What would be the effect of removing either the Matching Principle or the Revenue Recognition Principle from the process? Use a concrete example of how doing so might affect accounting in a given period.
Respond to your classmates’ postings by commenting on what might happen, if expenses are recognized over a period that is longer or shorter than that used for revenues.
- What is the difference between the cash basis of accounting and the accrual basis of accounting? Which one would you select for a company that has inventory and why? Does the size of the company make a difference? Explain how. What would be the advantages and disadvantages of using one basis of accounting over the other?
Respond to your classmates by commenting on which basis of accounting might be best for a large company with inventory and a small company