A key consideration in financial accounting is understanding the difference between accrual basis accounting and cash basis accounting. As we have already learned, Generally Accepted Accounting Principles (GAAP) requires that accrual basis accounting be utilized for financial reporting for publicly-traded firms and in general, the majority of firms utilize accrual basis accounting for financial reporting purposes, even if they are not publicly-traded. Let's explore and discuss the differences and implications of accrual basis accounting versus cash basis accounting in our discussion. Assume that XYZ, Inc. is a relatively small firm with limited understanding of accrual basis accounting.They utilize cash-basis accounting. Provide some hypothetical examples of the transactions that XYZ might utilize to record revenues and expenses for a given accounting period (the month ending 1/31/19) utilizing cash basis accounting. You make up both the accounts and the quantities involved in your examples. Assume that cash was received or disbursed in January of 2019. Please utilize the following format to reflect the transactions: DR Account Name XXXX CR Account Name XXXX Assume that XYZ, Inc. must provide accrual basis financial statements to their creditors to satisfy loan agreements at the calendar year end 12/31/18. You note that the cash basis revenues and expenses that you recorded in January of 2019 (those assumed above) were technically earned (goods shipped and services provided) and incurred (goods and benefits received from vendors) in December of 2018. What adjusting journal entry would you make in order to correctly reflect your year-end revenues and expenses on an accrual basis for your 2018 year-end financial statements? Please provide the adjusting journal entry in a form consistent with that outlined above. When you arrive at 12/31/19, is there another adjusting journal entry that you would need to make to your year-end cash basis financial statements to convert them to accrual basis? Using your hypothetical examples from above, what would the adjusting journal entry be and why? PART 2. Comment on why GAAP requires accrual basis accounting. Can you think of any reasons why some firms would prefer to utilize cash basis accounting?