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ACC 290 Wk 3 Summary Question ? Accrual and Cash Basis Accounting




In this assignment, I will describe the cash basis of accounting and the accrual basis of accounting and will explain the difference. Before you can start recording business transactions, you must decide whether to use cash basis accounting or accrual basis accounting. The big difference between the two accounting process is how you record your cash transaction.;Cash basis accounting is the easy and less expensive method of accounting. In this method of accounting, cash is recognized when the physical cash transaction occurs. Thus, this method does not recognize payables, receivables, and prepaid expenses. Additionally, cash basis accounting does not comply with the revenue recognition principle and the matching principle.;Accrual accounting is where revenues are recognized when they are earned, not when they are received. In accrual accounting, cash does not need to change hands before the revenue is recognized. Under the cash


Paper#20678 | Written in 18-Jul-2015

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