Why does Triana prefer the accrual basis accounting approach?

Triana's preference for the accrual basis accounting approach is rooted in the principles of consistency and reliability in financial reporting. Accrual accounting recognizes revenues and expenses when they are earned or incurred, regardless of when cash is actually exchanged. This method provides a more accurate representation of a company's financial position and performance over time, as it matches income with the expenses incurred to generate that income.

One of the significant advantages of accrual accounting is that it allows for consistent performance figures between accounting periods. This consistency is crucial for analyzing trends, making informed business decisions, and presenting a clear picture of the company's financial health to stakeholders. Moreover, by avoiding the timing issues inherent in the cash basis approach, which can lead to large fluctuations in reported income, accrual accounting helps maintain stable financial reporting.

In summary, the accrual basis of accounting is preferred for its ability to provide a comprehensive overview of financial performance that supports consistent evaluation and decision-making within the organization.