Short notes difference between Cash basis and Accrual basis accounting method

Posted on 06-05-2016        By ADMIN

Short notes difference between Cash basis and Accrual basis accounting method

Cash basis – It’s an accounting system that recognizes therevenue when the cash is received. Similarly, it leads to recognize the expensewhen the cash is disbursed or spent. It does not match expense with the relatedrevenue during the same accounting period- unlike the accruals basis accountingmethod which matches expenses with revenues during the same accounting period.

Accrual basis- It’s an accounting method that shows theaccumulation of revenues and expenses whose value has been incurred but forwhich no cash has been received or spent. Most businesses use this method,because it leads to match the expenses with the related revenues during thesame period and vice versa.

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