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Managerial Evaluations of the Relevance of Cash vs Accrual‐based Financial Reports in the Australian Food Industry
Author(s) -
JONES STEWART,
SHARMA ROHIT,
MOCK KERRY
Publication year - 1998
Publication title -
australian accounting review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.551
H-Index - 36
eISSN - 1835-2561
pISSN - 1035-6908
DOI - 10.1111/j.1835-2561.1998.tb00089.x
Subject(s) - cash flow statement , accounting , financial statement , accrual , cash flow , statement of changes in financial position , balance sheet , financial statement analysis , business , accounting information system , accounting management , financial ratio , financial accounting , accounting standard , relevance (law) , income statement , revenue recognition , cash flow forecasting , audit , political science , earnings , law
Many authors have argued that a cashflow statement prepared under the direct method is a superior decision‐making tool because it avoids perceived measurement and classification pitfalls associated with conventional accrual‐accounting procedures. This article investigates comparative decision‐usefulness ratings of the cash flow statement, profit‐and‐loss statement and balance sheet by a sample of accounting managers and executives. The ratings were further compared against firms' management accounting systems. Results suggest that the cashflow statement may be a complementary source of financial information for managers and may enhance the usefulness of information in accrualbased financial reports and management accounting systems.