AGRICULTURE FINANCIAL STANDARDS MANUAL

We also expect inclusion of verifiable anticipated future cash flows and matching of outflows to increase earnings' ability to predict future cash flows so that current earnings is a better predictor of future cash flows than are current cash flows. We provide support for both expectations in the simple model of firms' cash flows, accruals and earnings presented in the next section (section 3). In cases where a cash outlay is made but the future cash benefits are not verifiable, highly likely or easily determinable, the accrual process does not reflect the future benefits in earnings or capitalize their value as...