Briefly describe the difference between cash and accrual methods of record keeping.

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Briefly describe the difference between cash and accrual methods of record keeping.

business accounting

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Answer 1

Answer #1

Cash method of record keeping :

Cash method of record keeping recognizes revenues when the cash is received and recognizes expenses when cash is paid. Because the transactions aren't recorded until the cash is actually received or paid, it is easy to calculate the actual cash balance available at a point of time.

Accrual method of record keeping :

Under accrual method of record keeping, revenues are recognized when earned and expenses are recognized when incurred whether or not the cash is received or paid.

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Answer 2

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