Accrual versus cash basis of accounting PepsiCo, Inc. (PEP) is a food and beverage company with a variety of brands, including Frito-Lay, Gatorade, Pepsi-Cola, and Tropicana. On recent financial statements, Pepsi reported net income of $7,314 million and $2,257 million of depreciation expense. If Pepsi had used the cash basis of accounting, its net income would be approximately $9,649 million. Why would Pepsi's net income be higher if it had used the cash basis? Because depreciation expense a cash payment, it is result, Pepsi's accrual net income of $7,314 million is million depreciation expense of $2,257 million. in arriving at Pepsi's estimated cash-basis net income of $9,649 million. As a its estimated cash-basis net income of $9,649 million. Almost all of this difference of s