Financial statements are prepared using which basis of Accounting and why? Explain. by shaikh Ajwad Ashhab (213-15-4281) - Thursday, 24 November 2022, 9:51 AM Number of replies: 0 If a business wants to have its financial statements audited, it must use the accrual basis of accounting, since auditors will not pass judgment on financial statements prepared using any other basis of accounting. Modified Cash Basis of Accounting A variation on these two approaches is the modified cash basis of accounting. Permalink