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What Is The Difference Between Accrual And Cash Basis? |
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Answer» Accrual represents financial transactions and activities as they occur, such as rent expenses that always exists every month and are recorded WHETHER they are paid or not. Only in Accrual BASIS, you will have ACCOUNTS payable, accounts receivable, prepaid EXPENSE ASSET and customer deposit liabilities when there is a difference the time the transaction happens and the time that the actual payment is made. Cash basis will only report income and expenses as they are paid. Accrual represents financial transactions and activities as they occur, such as rent expenses that always exists every month and are recorded whether they are paid or not. Only in Accrual basis, you will have accounts payable, accounts receivable, prepaid expense asset and customer deposit liabilities when there is a difference the time the transaction happens and the time that the actual payment is made. Cash basis will only report income and expenses as they are paid. |
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