To help you understand and compare the performance of two companies in the same industry.

Go to the Columbia Sportswear Company Annual Report located in Appendix A. Now access the 2016 Annual Report for Under Armour, Inc. For instructions on how to access the report online, see the Industry Analysis in Chapter 1.

Requirement

By reviewing the financial statements of both companies, can you determine which basis of accounting, cash or accrual, each of the companies used? How did you determine this? If one of the companies used the cash basis and the other used the accrual basis, would it affect your ability to compare the two companies? Explain your answer.