Question: PROBLEM 210 Consider the following: While accrual accounting information is imperfect, ignoring it and making cash flows the basis of all analysis and business decisions

PROBLEM 2–10 Consider the following: While accrual accounting information is imperfect, ignoring it and making cash flows the basis of all analysis and business decisions is like throwing the baby out with the bath water.

Required:

a. Do you agree or disagree with this statement? Explain.

b. How does accrual accounting provide superior information to cash flows?

c. What are the imperfections of accrual accounting? Is it possible for accrual accounting to depict economic reality? Explain.

d. What is the prudent approach to analysis using accrual accounting information?

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