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Cash vs. Accrual Accounting and Balance Sheets - Essay Example
Finance & Accounting
Pages 4 (1004 words)
Cash Vs Accrual Accounting and Balance Sheets Table of Contents Table of Contents 2 Assignment 1 3 Q.1 Cash vs. Accrual Accounting 3 Q2. 4 Assignment 2 5 Q1. 5 The Value to the Audience 5 Q2. Financial Statements of Microsoft 6 Work Cited 7 Assignment 1 Q.1 Cash vs…
With the help of the cash accounting method any organization can identify its exact cash flow, provided if the company has entered each and every transaction in the account. Cash accounting method is comparatively easy to perform. Accrual basis accounting is the process where the transactions are taken into consideration once the order is made, the product is distributed, and service is provided. It does not consider the time when the amount is paid or received. In the accrual method of accounting, the expenses and the income would be recorded once the goods and the services have been received or the sale has occurred. It would not consider the payment at the same time of the transaction. This method essentially gives priority to the benefits or the facilities given or received and not the monetary transaction. Cash accounting method is more popular than any other accounting systems. Cash accounting method is easy to execute, on the other hand, accrual accounting method is more accurate in case of making a balance sheet for any organization. At times, accrual accounting is difficult to execute, due to certain confusions in the balance sheets. In the cash accounting method it is easy to maintain the finance, as the entry is not allowed till the payment is received on the sale and vice versa. ...
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