In Principles of Accounting I, you learned the difference between cash basis accounting and accrual basis accounting. These principles were reintroduced in Lesson 1. In general, people have very strong opinions as to which basis they feel is more accurate.

Required:

1. Which method do you feel provides the most reliable financial results? Why do you feel that way?
2. The text states that accrual basis is required for publicly traded corporations. Do you agree that accrual basis should be the only acceptable method? Can you think of a type of company that could achieve reliable financial statements using cash basis?