The Johnny Flowers Law Firm uses a client database. Suppose Johnny Flowers paid $2,900 for a…

 
   

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Comparing accrual and cash-basis accounting

The Johnny Flowers Law Firm uses a client database. Suppose Johnny Flowers paid $2,900 for a computer.

Requirements

1. Describe how the business should account for the $2,900 expenditure under

a. the cash basis.

b. the accrual basis.

2. State why the accrual basis is more realistic for this situation.