ابدأ بالتواصل مع الأشخاص وتبادل معارفك المهنية

أنشئ حسابًا أو سجّل الدخول للانضمام إلى مجتمعك المهني.

متابعة

What is the difference between Cash & Accrual Basis ? when we can use each of them ?

Please define both in order any one can use your experience in life.

user-image
تم إضافة السؤال من قبل khaled Ibrahim Sayed Abd El Salam Ibrahim , Chief Accountant , -ElMehy engineering company
تاريخ النشر: 2014/06/08
Ammad Buzdar
من قبل Ammad Buzdar , Accountant , International Knee and Joint Centre

Under the cash basis of accounting...

 

    1. Revenues are reported on the income statement in the period in which the cash is received from customers.

 

  1. Expenses are reported on the income statement when the cash is paid out.

Under the accrual basis of accounting...

 

    1. Revenues are reported on the income statement when they are earned—which often occurs before the cash is received from the customers.

 

  1. Expenses are reported on the income statement in the period when they occur or when they expire—which is often in a period different from when the payment is made.

The accrual basis of accounting provides a better picture of a company's profits during an accounting period. The reason is that the income statement prepared under the accrual basis will report all of the revenues actually earned during the period and all of the expenses incurred in order to earn the revenues. The accrual basis of accounting also provides a better picture of a company's financial position at a moment or point in time. The reason is that all assets that were earned are reported and all liabilities that were incurred will be reported.

المزيد من الأسئلة المماثلة