role & purpose of a/c basis???

Role and purpose of using cash flow accounting basis：
The main role of it is to show the income and expenditure of a company in a financial year.It helps the managers to know clearly about the financial situation of a company, as well as the cash flow of it. Therefore, the managers can make investment according to the actual cash flow. Moreover, the problem of shortage in cash, if any, can be quickly found.In this way,cash flow accounting basis has the purpose of providing a clear picture of actual cash of a company through the financial statement.

Besides, cash flow accounting basis also helps to mislead people of a company's financial situation. In order to show a more favourable performance, the company can choose to pay its debts and expenses later so that the financial performance can be more profitable. On the other hand, it can also pay more debts and expenses in order to reduce the tax charged by the company. Therefore, the cash flow accounting basis can play the role of misleading the public and the others.


Regarding using accrual accounting basis in financial statement ,
The main purpose of it is to show the revenues and expenses of a company in a financial year.Therefore, it provides a better perspective of management performance and results. It can also show the profitability of a company in a current year.

Another role of using accrual accounting basis is to tell the clear picture of the actual performance of company regardless of the actual cash flow of it. By matching revenues and expenses, the financial statement shows the current performance even thought the money has not been received. In the way, managers can still have planning of further investment in the foreseeable future.