Asked by sarthak mahajan on May 29, 2024

verifed

Verified

Accrual accounting decouples measured earnings from operating cash inflows and outflows.

Accrual Accounting

A financial reporting strategy that recognizes income and expenditures at the time they are earned or incurred, without regard to the actual movement of cash.

Operating Cash

refers to the cash that a business generates from its normal operating activities, crucial for maintaining day-to-day operations.

  • Understand the implications of accrual accounting on the measurement of earnings and its potential discrepancies with cash flows.
verifed

Verified Answer

SC
Shannon CopelandJun 01, 2024
Final Answer :
True
Explanation :
Accrual accounting recognizes income and expenses when they are earned or incurred, regardless of when cash is actually received or paid. This means that earnings may not necessarily align with cash transactions, resulting in a decoupling of earnings from operating cash flows.