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Accrual versus cash basis of accounting PepsiCo, Inc. (PEP) is a food and...

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Accounting

Accrual versus cash basis of accounting
PepsiCo, Inc. (PEP) is a food and beverage company with a variety of brands, including Frito-Lay, Gatorade, Pepsi-Cola, and Tropicana. On recent financial statements, Pepsi reported net income of $7,679 million and $2,710 million of depreciation expense. If Pepsi had used the cash basis of accounting, its net income would be approximately $11,616 million. Why would Pepsi's net income be higher if it had used the cash basis?
Because depreciation expense a cash payment, it is
in arriving at Pepsi's estimated cash-basis net income of $11,616 million. As a result, Pepsi's accrual net income of $7,679 million is its estimated cash-basis net income of $11,616 million. A majority of this difference of $ million depreciation expense of $2,710 million.
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