A businessperson you know has just received the financial statements of a company in which that person owns shares. Answer the following questions asked by the person. Try to answer without jargon, and use examples that will make your answers clear.

a. 'I've been told that these accrual accounting numbers are "mainly a matter of timing". What does that mean?'

b. 'I see that the company has a note in its financial statements describing its "revenue recognition" method. Why would I want to know that?'

c. 'I know from my business experience that sometimes you collect cash sooner or later than you expect. Customers may have cash, or not, for all sorts of reasons that have nothing to do with you. I understand that accrual accounting takes this into account so that it doesn't matter when cash is collected, you get the same revenue figure anyway. Is this true?'

d. 'I understand that accountants try to be sure that revenues and expenses "match", so the profit you get by subtracting expenses from revenues makes sense. It seems quite appropriate. But what effect, if any, does this matching procedure have on the balance sheet figures?'