Final answer:
The claim that reports are always generated based on the pre-set Cash or Accrual basis in Company Preferences is false. Accounting software typically allows switching between cash and accrual basis for reports, with cash basis recognizing financial events upon money exchange, and accrual basis when transactions occur.
Step-by-step explanation:
The statement that reports are always generated based on the Cash or Accrual basis set in Company Preferences is false. While the default setting in a company's accounting software, such as QuickBooks, may be set to either cash basis or accrual basis, most accounting programs allow the user to switch between cash and accrual basis when generating reports. The cash basis of accounting recognizes revenues and expenses only when money changes hands, while the accrual basis recognizes revenues and expenses when they are earned or incurred, regardless of when the cash transaction occurs.
When it comes to financial reporting, users can choose the method that best suits their needs at the time of the report creation. For example, some reports may be more meaningful when viewed on an accrual basis, providing a better picture of the company's financial position, whereas a cash basis may be simpler for tax preparation or understanding cash flow.