What do cash and accrual reports represent?

• A. Cash reports show current cash in accounts; accrual shows what would be in accounts if all bills were paid and customer payments received
• B. Cash reports show future cash; accrual shows past cash
• C. Cash reports show credit limits; accrual shows balances
• D. Cash reports show only cash on hand; accrual shows all assets

Answer: (A)

Cash vs accrual reports measure different parts of the financial picture. A cash report shows the actual cash balance available—cash in bank accounts and on hand at a specific moment—useful for liquidity and day-to-day cash management. An accrual report represents the financial position under accrual accounting by including amounts owed to you (accounts receivable) and amounts you owe (accounts payable), and it recognizes revenue when earned and expenses when incurred, regardless of whether cash has moved. Put differently, the accrual view shows what would be in the books if all outstanding bills were paid and all customer payments were received. This distinction helps explain why cash reports and accrual reports can tell different stories about liquidity versus profitability.