Vol. 2, Issue 10 (2015)
Effectiveness of accrual basis accounting as compared to cash basis accounting in financial reporting
Author(s): Md. Rouf Biswas, Sk. Mahrufur Rahman, Mirza Arifur Rahman
Abstract: In financial reporting there are two bases of accounting one is accrual basis and another is cash basis. In this article we collected data from 12(twelve) private firms over 05 (five) years. We have also collected data from 30(thirty) executives from the outsiders to show their opinion. This article focuses the usefulness of accrual basis of accounting. This paper also focuses the limitations of cash basis of accounting in financial reporting. Statistical tools like Cronbach's Alpha, R square, F value and coefficient has been used to analyze the collected data. This study also shows how the accrual basis is more effective than cash basis of accounting. The basic differences between the two bases of accounting are described into this paper. Finally, some proposal has been made to get more benefits from accrual basis of accounting.