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A Comparison of Financial Results Based on Accrual and Cash Accounting Data

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Eurasian Business Perspectives

Part of the book series: Eurasian Studies in Business and Economics ((EBES,volume 8/1))

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Abstract

This article aims to investigate the relationship between the indicators commonly used to assess a financial situation based on accrual and cash flow accounting. A company’s financial result is distorted in different ways. Cash flows compared to financial results are not subject to manipulation resulting from accounting policies employed in a given business entity. Hence, formulated hypothesis assumes that the assessment of profitability carried out with the use of cash flow indicators reflects the true and reliable image of a company, in contrast to the indicators based on a financial result. The hypothesis about dissimilarity of the assessment of a financial condition has been proven by the analysis of the correlation between the accrual and cash results The analysis of a financial situation based on cash flows led to a conclusion that a financial situation is more complete, reliable and not affected by balance and tax policy, but there are also differences between the assessment based on financial ratios calculated on the basis of accrual data (the balance sheet and the profit and loss account) and the financial situation of the studied companies based on cash data The article uses the method of economic analysis, descriptive statistics and correlation analysis.

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Author information

Authors and Affiliations

  1. Faculty of Economics and Management, University of Szczecin, Szczecin, Poland

    Edyta Mioduchowska-Jaroszewicz

Authors
  1. Edyta Mioduchowska-Jaroszewicz
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Correspondence to Edyta Mioduchowska-Jaroszewicz .

Editor information

Editors and Affiliations

  1. Faculty of Political Sciences, Istanbul Medeniyet University, Istanbul, Turkey

    Mehmet Huseyin Bilgin

  2. MUFG Union Bank, San Francisco, California, USA

    Hakan Danis

  3. Faculty of Tourism, Istanbul Medeniyet University, Istanbul, Turkey

    Ender Demir

  4. Eurasia Business & Economic Society, Fatih, Istanbul, Turkey

    Ugur Can

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Mioduchowska-Jaroszewicz, E. (2018). A Comparison of Financial Results Based on Accrual and Cash Accounting Data. In: Bilgin, M., Danis, H., Demir, E., Can, U. (eds) Eurasian Business Perspectives. Eurasian Studies in Business and Economics, vol 8/1. Springer, Cham. https://doi.org/10.1007/978-3-319-67913-6_6

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