An appropriate accounting basis for a government trading entity

M.Com. (International Accounting)This limited-scope dissertation is based on a case study performed on a trading entity in a national department in South African government. This limited-scope dissertation contributes to the body of knowledge by examining the effect of the adoption of the accrual basis of accounting on the quality of information available for decision making. There are arguments that the accrual basis of accounting will provide enhanced information for decision making and that it will increase the ability of the users of financial statements to evaluate the financial position and financial performance of entities in the public sector. This limited-scope dissertation assesses the effect of the adoption of the accrual basis of accounting on decision usefulness of information provided in the financial statements of departments in South Africa. This assessment is effected based on the financial statements of a trading entity in a department in South Africa, which has already adopted accrual accounting. To enable an objective assessment of the effect of the adoption of the accrual basis of accounting, two sets of financial statements, in respect of the same entity and the same financial period are compared, one prepared on the modified cash basis of accounting and the other prepared on the accrual basis of accounting..