Sales and Marketing Director

ACC 290 Accrual versus Cash Basis Accounting

ACC/290

Accrual versus Cash Basis Accounting

Commercial accounting and general accepted accounting principles, generally prescribe the accrual basis of accounting over the cash basis. Because there are many benefits of the accrual basis accounting including, forecasting and invoices recognition this method is most used. Accrual basis accounting means a company recognizes revenue when earned while cash is still pending or not yet received. The matching principle is used to recognize expenses when incurred even when the cash is not yet received. Under the cash basis accounting, companies record revenue only when the cash is received and record expenses only when the cash is paid out. The cash basis of...