MEMORANDUM
To: Richard Chen
From: Elton Kok
Date: October 4th, 2020
Subject: Peer Review of Accrual Accounting
Hi Richard,
I have read through your definition of accrual accounting and I definitely have a strong grasp of the term and why it is current practice for businesses today. I have written my review of the definition below.
Initial Impressions
Upon my first read through of your definition, I felt as if I understood what accrual accounting however, I found I had to re-read some paragraphs due to my lack of accounting and business transaction knowledge. I felt I was unable to understand the term solely through the parenthetical definition, but was able to understand it through the sentence and expanded definition. I felt what really helped me understand accrual accounting is when you compared and contrasted it with cash accounting. The comparison very clearly showed me why accrual accounting is important and used today. I also really appreciated the timeline figure for the example. It clearly shows how the accounting of a transaction would differ under the two systems.
Purpose
The purpose of the definition is clearly defined in the introduction and the situation. The document stays on topic and minimizes the use of jargon so that people without accounting knowledge can understand.
Suggestions
For the most part, the definitions are well done. I would maybe ask to revise the parenthetical definition as I felt I had to read the sentence or expanded definition to understand accrual accounting. A question I found myself asking is: what problems would arise from using cash-based accounting? A possible suggestion could be to highlight why the issues with cash based accounting is problematic and relate that back to how accrual accounting solves those issues.
Organization
The following are the methods I have identified in the expanded definition:
- Visuals
- Comparison and Contrast
- Examples
- History
I think these methods are appropriate for the definition and I feel you have used all of them well to illustrate what accrual accounting is and the need for it. As stated in the initial impressions, I felt the most helpful methods were the comparison and contrast and the visuals as they clearly showed the difference without accrual accounting.
Overall Impressions
I enjoyed reading your definition and I believe I now have a strong understanding of the term accrual accounting and why it is necessary. I think the areas you could improve on is the parenthetical definition and possibly showing the consequences of the issues with cash-based accounting. I believe your definition was appropriate and limited the use for jargon which was extremely helpful for someone like me without an accounting background.
I hope this helps you for the final draft of the definition,
Elton Kok
Link to original definition: Definition of Accrual Accounting by Richard Chen
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