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in cash basis, only the transaction with money exchange are booked while in accrual basis the transactions are booked regardless of the money exchanged or not. accrual basis is more accurate and keep the books most updated.
C/b:Revenues are recorded when they are received, which may be before or after they are earned.
A/b: Revenues are recorded when they are earned, which may be before or after they are received.
C/b:Expenses are recorded when they are paid, which may be before or after they are incurred.
A/b:Expenses are recorded when they are incurred, which may be before or after they are paid.
C/b:Financial statements reflect revenues and expenses based on when transactions were entered rather than when revenues were earned or expenses incurred.
A/b:Financial statements match revenues to the expenses incurred in earning them, and more accurately reflect the results of operations.
C/b:No receivables are recorded.
A/b: A receivable is recorded when payment is not received at the point of sale.
C/b: No payables are recorded
A/b: Payables are recorded when payment is not made at the time of purchase.
C/b: No method of tracking partial payments is available.
A/b: Revenues and expenses are recorded in full, even though partial payments may be made over extended time periods.
Accrual basis is more accurate than cash basis .In accrual basis we record any transaction when it occur regardless is there any cash in or cash out
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.
2. 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.
2. 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. The accrual basis of accounting is required because of the matching principle.
1 cash basis:
It is intended to prove at the expense of the financial year is earned by the unit of revenue and disposal of expenses during the year, even though it was right in those revenues, or be bound by these expenses previously for the fiscal year or later it, and have the final account for this situation account physically does not like his statement what arises from the rights of the unit and the consequent obligations, and has been there is no reason to work an inventory adjustments at the end of the fiscal year and Bhdh rights and obligations. The application of this basis, the leftover budget appropriations that do not act until the end of the fiscal year shall be canceled because there is no need to keep them, as the face of what may be there of obligations arose during the financial year and did not act worth before the end, be a settlement on the appropriation that is death in them. As well as in relation to income, what gets them after the end of the fiscal year in which earned is added to the account of the year that occurred collection, and it follows that it is not permissible under the income due to the financial year as a religion on individuals or private bodies in addition to the revenue account. The advantage of this method is simple, and filmed for the case of the public treasury portrayal accurate and clear, and the possibility of closure of accounts and preparation of the final accounts at the end of the fiscal year. However, the maligned it and filmed the expense of the Treasury, it does not portray the financial accounts portrayal accurate, and therefore not possible to derive the correct results of the implementation of the budget and find true financial position for the fiscal year; so as to ignore the rights and the debt owed to the public treasury or by which you do not get or disposal during the financial year, In addition to> you the accelerate or delay the collection or exchange leads to show the expense of the fiscal year on a non-truth; as this may lead to the transfer of the amounts of many of the financial year to another, and as well as this, the following cash basis may tempt the interests of the bank prior to the expiration of the year financial exhaustion or leftover funds could push them to postpone some of the amounts due to the following year's budget to ease for the year ended. In addition to the above, it can follow the cash basis to achieve a balance My in the state budget, and knead assuming the possibility of achieving revenue given in the financial year, while it will not get physically, but in the following year, as can be the opposite of the rules of engagement, the assumption that the expense is worth the financial year will not be distracted, but in the following year; thus swells revenue in the first case and less expenses in the second case and the budget balance in form only, has been working in the administrative units in many countries on the use of cash basis - both in the development of estimates of their budgets or constipation calculated - albeit some states have begun to come out on this basis in a lot of cases
2-accrual basis:
This means that the fiscal year include the accounts of all income and expenses of the consequences of the actions of which has been without regard to the date on which it received the income or expenses spent it. And give this topic the way for the financial year personal stand-alone add to them all the rights, and deserve it all the obligations that arise in which, therefore, some called (the way the financial year) and prevent the introduction of foundation accrual adjustments necessary to determine for each fiscal year of revenues and expenses and upload them. (The accrual basis) followed originally in commercial projects and advantages that depicts the account of each fiscal year portrayal right. However, for the application of this basis in the state does not need to bring an additional period for fiscal has been lengthened in some cases to a few years, and knead until the possible settlement of the results of the currencies of revenue and exchange licensed under the budget law, and follow the settlement of the rights and obligations of the fiscal year. Based on this, it is flaws this topic way delay the closure of accounts with what may have on knead of confusion for business calculations, and the ambiguity of the financial position of the state to delay determining the actual results for each fiscal year, and throwing a heavy veil on the financial irregularities that are discovered only after years of occurrence, strayed from the lack of the availability of data needed to estimate the numbers of the budgets of the following fiscal years
On Accrual Basis Expense are recorded when they occur whether they paid or not
On Accrual Basis Revenue is Recorded when they earned whether they receive it or not.
On Cash Basis Expense are recorded when they Occurred and paid.
On Cash Basis Revenue is recorded when they earned and receive in cash.
Accrual basis is more useful than cash basis to know about your business situation.
Cash Basis Accounting:
Revenues entered in Income Statement at the time which the cash is received from Customer
Accrual Basis Accounting:
Revenues and Expenses are reported in Income Statement when they earned or occur.
Accrual basis is more accurate than cash basis
In accrual basis, revenues are recognized upon the delivery of a good or service, while expenses are incurred upon the acceptance of a good or service, or when a loss is reasonably assured to occur.
Cash basis recognizes inflows and outflows as money changes hands, regardless of whether the goods or services are rendered.
In accounting terms, accrual basis is more reliable due to its conservative nature for recording transactions.
However, if we're discussing financial decision taking, asset management, working capital planning or investment decisions, more emphasis is placed on cash flow and most transactions are reversed into cash basis to evaluate such decisions.
In short, for book keeping, use accrual basis accounting, for financial and investment decisions, revert to cash flows.
Who preceded me do good answers I agree with Mr. Georgei Assi answer.
I AGRRE WITH MR KHALD ABD ELREHIM ANSWER
