Cash vs. Accrual Accounting 101: Why YOU should care

professional profile

April 01, 2022

by a professional from Harvard University - Harvard Business School in Atlanta, GA, USA

If you've ever wanted a crash course on cash vs. accrual accounting and why you should care - check out my new War Stories blog post that addresses how it played a role on a real deal.

https://www.guardianduediligence.com/blog/aquisition-war-story-what-accounting-reveals

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Reply by an intermediary
from The University of Chicago in Chicago, IL, USA
Elliott: Excellent. I went through your website also. Very useful info for Searchers.
1) In addition to Cash, accrual, and cash + accrual, there is pre-recording and not-recording.
2) Your "proof of cash" is a powerful tool. In addition, I look at "Delta Analysis" on a yearly and monthly often helps, minimum 5 years, and detail equity account analysis.
3) Small businesses do not have GAAP financials. And GAAP and/or audited financials are not a security blanket by any stretch of imagination.
4) Good reps and warranties can help flush out intentional financial tricks and protect the buyer against oversights.

Thanks for sharing.
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Reply by a lender
from California State University, Sacramento in Seattle, WA, USA
Outstanding post ^redacted‌. On the lender side we often see deals where is it casually suggested that “you just accept the internal cash to accrual reconciliation’” in order to justify price and DSC. There is nothing casual about it. A formal QoE might very week be in order to find the true cashflow.
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