Accrual Accounting Versus Cash Accounting free essay sample

Substantive means containing discussion that demonstrates knowledge and ability to analyze the topic at hand. Does not mean a simply repeating previous posts and agreeing. Discuss the pros and cons of accural accounting versus cash accounting methods. All  discussion forums must require at a minimum: 1-Research (at least 2 citations) 2-Critical Thinking 3-Opportunity for dissent. Accrual Accounting versus Cash Accounting Ok, if we are to attain our career goals we need to understand these two methods of accounting. This topic is very important in almost any field that one chooses to fashion their career. Yes I have had the privilege to work in the retail industry for more than 12years as a manager so I got a good hand on these two methods of accounting. Accrual accounting which is more common with large companies and Cash Accounting that normally work well for the smaller pops and moms stores Cash Basis Accounting: This kind of accounting is used when you want to report income and earning during the period of fiscal accounting. We will write a custom essay sample on Accrual Accounting Versus Cash Accounting or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Cash based accounting means that when you receive the money the sales are recorded right away. The expenses is also recorded when they are paid. Cash based method is good if your income is less than one million and you instantly collect money for your product and service. Ironically the government used this method even if they earn more than trillion dollars. Cash based accounting is very simple method but it can only record cash transactions and doesn’t take note about everything else. It can never work for businesses who doesn’t credit or offer credit. If your business is not keeping inventory then this is good choice. Whit this kind of accounting, there are no account receivable and account payable. Accrual Basis Accounting: Accrual accounting is widely used and accepted by most businesses because it can reflect the finances of any business. On the other hand, for accrual based accounting it means that the sale is also recorded when it occurs and it doesn’t matter if you receive money or not. This is a good method if your business is in average size. This is perfect method if you need to keep track of your company’s profit on a regular basis. This type of accounting method deals with business output rather than it input. This is perfect method if your business wants to monitor their resources. It is cost effective and efficient. With accrual based, you can compare the whole cost of your product and services with the standards of the industry. Another notable advantage is it you use accrual based accounting, you can improve your accounting and you can better manage your finances