Accrual Accounting vs. Cash Flow Accrual accounting, which results from the matching principal , results in revenues and expenses being recorded in different periods than when the associated cash flows occur. A company may record an expense this year, but the cash outflow may not occur until next year. Both accounts receivable and accounts payable are a result of accrual accounting. In general, the market value of either equity or assets is not the same as book value. Book value is based on the cost principle and reflects the cost of a transaction which has occurred or is reasonably certain to occur.
Book value is an accounting number.
Market value, on the other hand, represents the market's estimate of the value of assets or equity. The income statement measures performance over some period of time . Interest Taxable income Taxes Net income Note that net income is not the same as cash flow. The primary differences relate to accrued revenues and expenses, and to noncash expenses such as depreciation. As we discussed earlier, corporations must pay taxes.