Comparative Analysis between Accrual Basis and Cash Basis Accounting in the Aspect of Financial Reporting (A Study on Some Selective Local Firms in Bangladesh)

Abstract

Financial reporting is prescribed with two bases of accounting by the practices, one is accrual basis and another is cash basis. The study contains overusing last five years financial data (2010-2014) of twelve local firms and also thirty independent financial executives. The vital point of the study is the expediency of accrual basis of accounting. This paper also clarifies the drawbacks of cash basis of accounting in the field of financial reporting. Sophisticated statistical tools like Cronbach's Alpha, R square, F value and co-efficient have been used to explore the collected data. This study also reveals how the accrual basis accounting provides comparative advantages over cash basis of accounting. Some specific recommendations have been made by explicating the fundamental differences between these two aspects from different viewpoints, that would be able the users to get more benefits from the application of accrual basis of accounting.