Final answer:
The Accrual accounting method is deemed a better indicator of future operating cash flows compared to the Cash Basis method. It recognizes revenues and expenses when they are incurred, not just when cash is exchanged, allowing for a more accurate prediction of future cash flows.
Step-by-step explanation:
The question posed is related to the comparison between two accounting methods, the Cash Basis and Accrual method, in terms of which provides a better indicator of future operating cash flows. In general, the Accrual accounting method is regarded as a better indicator of future operating cash flows because it records revenues and expenses when they are incurred, regardless of when the cash is actually exchanged. This approach provides a more accurate picture of a company's financial performance over time and can help predict future cash flows by recognizing the economic events regardless of cash transactions. In contrast, the Cash Basis accounting method records revenues and expenses only when the cash is received or paid, which may not reflect the true financial situation of the business as it ignores the timing of receivables and payables.