4. What does the following statement mean? If I want to assess the cash-flow prospects for a company ‘‘down the road,’’ I look at the company’s most recent statement of cash flows. An income statement...

4. What does the following statement mean? If I want to assess the cash-flow prospects for a company ‘‘down the road,’’ I look at the company’s most recent statement of cash flows. An income statement prepared under the accrual basis of accounting is useless for this purpose.

5. What is the relationship between the time period assumption and accrual accounting?