Question

Create a table comparing accrual and cash accounting (these are the columns).

Include in the rows of the table the following properties/characteristics for each business form (ensure writing is in APA format i.e. when providing citations, etc): Definition of accounting method When are revenues recorded for each method When are expenses recorded for each method Advantage of the method over another method (i.e. why business choose this) Disadvantages of this method Example of the company using this Other characteristic to discuss, if any other exists.

Answer 1

The following is the table comparing Accrual and Cash Accounting

Characteristics	Accrual Accounting	Cash Accounting
Definition	Accrual Accounting is the method of Accounting recording the trasactions when they occurred and analyses the position of the company irrespective of when cash is received or paid	Cash Accounting is the another method of accounting which records the transacctions on cash basis i.e when the cash is received or paid.
When are Revenues recorded	In Accrual Accounting revenues recorded when they are earned. It means when the product or service is delivered to a customer with an expectation to receive in future and is recorded as revenue even though cash is not received	Revenues are recorded when we receive the cash from the customers for the products or services.
When are Expenses recorded	Expenses are recorded when they are expensed. It means when the product or service is received or utilised with an intention to pay cash in future	Expenses are recorded when the cash is actually paid rather than when the product or service is received.
Advantages	The following are the Advantages of Accrual Accounting: 1) Accrual Accounting shows the true and fair Fiancncial position of the company matching revenues and expenses according to the Matching Concept when compared to Cash Accounting 2) For Income tax purposes Accrual method of Accounting is accepted according to GAAP which does not accept Cash Accounting 3)Investors are preferred to invest in the companies which follow Accrual basis of Accounting as it projects true and fair financial position of the company and does not prefer Cash Accounting	The following are the Advantages of Cash Accounting: 1) It is very simple and easy to maintain the Books of Accounts under Cash Accounting while Accrual Accounting is complex 2) It does not require expertised knowledge of Accounting while Accrual Accounting requires 3) It is cheaper than the Accrual System of accounting when compared to Accrual Accounting 4)It requies to record less number of transaction , so it consumes less tme when compared to accrual accounting which has large number of transactions.
Disadvantages	The Disadvantages of accrual Accounting are as follows: 1) If the accounts receivable which are already recorded as revenues may turn into Baddebts due to the uncertainity. Then Tax is paid for the revenue which is actually not received. 2) Accrual Method of Accounting is complex in nature. It is difficult for the small companies to maintain Accrual Method fof Accounting. 3)This method of accouting is required to prepare on frequent basis.Atleast on monthly basis it need to be prepared.	The Disadvantages of Cash Accounting are as follows: 1)This system does not provides true and fair position of the company as it does not uses Matching Concept. 2)For Financial Auditing purposes Cash Accounting is not Considered. 3)Investors does not shows interests with the company maintaining Books of Accounts on Cash Basis. 4)It does not maintain the books of assets and liabilities. it need to be take care or else it will might be misplaced or stolen
Examples	All the Large Sized companies both private and public uses Accrual method of Accounting as it cannot rely on Cash Accoounting and also due to its legal requirements.	Caash Basis of Accounting is used by the small companies which deals only in cash having less transation, less number of employess and which does not required to prepare financial statement of Accounts.
System Of Entry	It uses Double Entry System	It uses Single Entry System
Nature	It is Simple in Nature	It is Complex in Nature
Matching Principle	It uses the concept of Matching Revenues and Expenses	It does not match expenses and revenues
GAAP Provisions	It conform to GAAP Provisions	It does not conform to GAAP Provisions
True and Fair Position	It shows True and Fair Position of the company	It does not provide true and Fair position of the company