Accrual Accounting System
The accrual accounting system is a standard system used by most businesses and is also the system used in the simulation. In relation to the rules of accrual accounting, consider the following questions:
- How does the accrual accounting system impact the financial statements and the standing positions of firms in the simulation such that these may not reflect the true, long-term sustainability of the firms’ strategies?
- What is being “unaccounted” for?
- What contrasts are there between what is shown in cash flow statements and the need for firms to borrow at high rates and firms’ income statements?
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