StudentShare solutions
Triangle menu

Cash vs. Accrual Accounting and Balance Sheets - Essay Example

Nobody downloaded yet

Extract of sample
Cash vs. Accrual Accounting and Balance Sheets

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. On the other hand, the accrual accounting method would increase the difficulties as the transactions might be entered before getting the payment, which might inturn raise problems for the organization. Both the accounting methods are helpful to evaluate and to analyze the company finance at the end of the financial year, with their distinct natures. Q2. The cash accounting method is easier to perform in case of small businesses. The cash accounting method does not record the transactions in the balance sheet until and unless the payment has been done for the transaction, either by the buyer or by the seller. Once an organization pays for the order placed, the transaction would enter the balance sheet and at the same time if the organization receives the payment for the order placed to them, they would enter the detail of the transaction. It is an easy process, provided the company size is small. Cash accounting does not enter all the dealings at the time of the transaction, thus it would create difficulties and conflicts in case of larger sized organizations. Therefore, they imply the accrual accounting method for its better accuracy and clarity. Accrual accounting system includes all the transactions made either paid or not. This helps to know the exact cash flow of an organization. Therefore, the cash accounting is more popular in small businesses and the accrual accounting is more effective in case of the big enterprises. Assignment 2 Q1. Balance Sheet is one of the most vital and crucial aspects of financial accounting. It is the total or the summarized value of the finance of an organization at the end of the financial year. A balance sheet includes partnership, proprietorship, assets of a company, and liabilities of a company and the equity of the owner among others. The date on the balance sheet after every financial year is different in case of different companies. If in any case a company does not have their balance sheet, for example Microsoft, it would be very difficult to know the transactions made by the company, whether the company has faced loss or profit, what are the liabilities and the assets of ...Show more


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…
Author : dubuquebeau
Cash vs. Accrual Accounting and Balance Sheets
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Cash vs. Accrual Accounting and Balance Sheets"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

Cash and accrual accounting
These include cash and accrual method and the company can use any method depending on the benefit they receive from using either of the techniques. Thus, the cash basis accounting seems attractive because of its simplicity in that the accounting records are maintained on the cash flow of the business.
5 pages (1250 words) Essay
Accrual Accounting
Accrual Accounting Accounting is medium of communication used to interpret financial information for different users. It is based on several concepts that standardize its practices to be consistent for ease of understanding and reporting for all professionals.
1 pages (250 words) Essay
Paper Cash vs. Accrual Accounting
This method measures a company’s position and performance through recognizing economic activities regardless of the time cash transactions will take place. On the other hand, the cash accounting process differs because it recognizes revenue and expenditure only when cash is received or paid out for transactions (Palmer, Coombs & Smith, 1999).
3 pages (750 words) Essay
Principles of managerial accounting. Answers to Questions. (Cash Flows Information, Apple's Cash Flow, Stock Features, Role of Management Accounting etc.)
What information does the cash flow statement provide that you cannot see in the other financial statements (income statement, balance sheet, owner’s equity)? What elements of the cash flow statement do you think are most important for company management to monitor and why? Is this different for investors?
8 pages (2000 words) Essay
Accounting - Cash and Accrual
mathematician Luca Pacioli who first introduced the concept of a double entry system in his book Summa de Arithmetica, Geometria, Proportione ET Proportionelite. For over 500 years accounting has served an instrumental role in the business development of firms throughout the
4 pages (1000 words) Essay
Cash vs. Accrual Accounting and Balance Sheets
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
4 pages (1000 words) Essay
Cash vs. accrual: Is there a difference in recognizing transactions
The general definition of recognition is the acknowledgement of an occurrence. In accounting, the term is used to imply the acknowledgement of monetary value in transaction. Such incorporation of monetary value can be done on either cash or accrual basis. This paper
4 pages (1000 words) Essay
Accounting Principles
Each of the business entities keeps principles of accounting in three ways; accounting, book keeping and auditing and all these are the basic principles lie
4 pages (1000 words) Essay
Describe key financial statements, including balance sheets and cash flow statements
on, data on a balance sheet can be employed to calculate vital signs that highlight the structure of a business and its capacity to meet its responsibilities (Longenecker, Petty, Palich, & Hoy, 2012). These may comprise quick ratio, working capital, or current ratio. An income
2 pages (500 words) Essay
Accrual and Modified Accrual Basis of Accounting
The accrual accounting emphasizes recording and allocating revenues and expenses in the financial periods when received and paid
1 pages (250 words) Essay
Comments (0)
Click to create a comment
Let us find you another Essay on topic Cash vs. Accrual Accounting and Balance Sheets for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
Join us:
Contact Us