When will profit figures be the same under Cash and Accrual accounting?

Profit figures under cash accounting and accrual accounting will be the same over the life of the business due to the fundamental principles governing both methods.

In cash accounting, revenues and expenses are recognized when cash is received or paid, while in accrual accounting, they are recognized when they are earned or incurred, regardless of cash flow. Although the timing of recognition differs between these two accounting methods, over the long term, both methods will ultimately capture the same economic events.

This convergence occurs because all cash inflows and outflows will be accounted for within the overall duration of the business operation. Any timing discrepancies in the recognition of revenues and expenses in the short term will balance out throughout the life of the business, resulting in the same total profit amount when looking at the cumulative figures.

Other options suggest situations where profit figures might not coincide. For example, at the end of each accounting period, profit figures can vary significantly due to timing differences. Additionally, no specific fiscal year will guarantee profit figures to be the same since it depends on the timing of income and expenses recognized within that year. Lastly, the preparation of financial statements will show discrepancies based on the chosen accounting method for that particular reporting cycle.