15.5. Relationship Between Accounting Principles and Software Systems

Try these first

1. 1.

   What does the accrual basis state?

   Hint

   Think about cash transactions.

2. 2.

   Define the matching principle.

   Hint

   Consider periods for income statements.

3. 3.

   What does the accrual basis of accounting emphasize?

   • Recording when cash is received
   • Recording when earned
   • Recording based on estimates

   Hint

   Think about cash flow.

4. 4.

   True or False: The matching principle ensures that all expenses must be recorded after cash is paid.

   • True
   • False

   Hint

   Recall when expenses should be recognized.

5. 5.

   Design a comprehensive accounting system incorporating the accrual basis and matching principle. Explain how you would implement these.

   Hint

   Consider how timestamps for transactions could work.

6. 6.

   Analyze a hypothetical firm's financial reports over two periods. Identify any violations of the matching principle and the implications.

   Hint

   Think about how timing affects financial outcomes.