Other observations: First, for accounting purposes, applying Occam's Razor (the simplest theory is preferred to the more complex) would lead to the return of cash basis accounting (because it is much simpler than accrual accounting), but I doubt many accountants would view that as an improvement.
If you are a sole owner, partnership or S corporation that has adopted a cash basis accounting system, you can shift cash from money market funds into short-term discount obligations, such as CDs, that mature next year.
For many, the choice is simple: the simplicity of cash basis accounting appeals to most small charities, while large organizations generally find the more sophisticated accrual basis better reflects their financial health.
A study of the small print of Chancellor Mr Gordon Brown's Budget has removed the financial fears of many UK professional people, such as lawyers, who had faced the sudden ending of more than 100 years' of cash basis accounting.
While cash basis accounting provides very limited information to financial statement users, many companies believe that adoption of accrual accounting would cause adverse economic consequences for their firms.
Also, conventional wisdom tells us that accrual basis accounting is vastly superior to cash basis accounting. Accrual basis accounting makes it possible to summarize all revenues and expenses applicable to a given time period in that time period, despite when the actual cash flow occurred or will occur.