Scribd Logo
Upload

Welcome to Scribd!

  • Corporate Case-5

    Uploaded by

    Vinushree J Pawar
    8 views1 page
    This case study compares cash accounting and accrual accounting. [1] Cash accounting only records revenues when cash is received and expenses when cash is paid, while accrual accounting records revenues when earned and expenses when incurred regardless of the timing of cash flows. [2] Accrual accounting provides a more accurate picture of a company's financial situation by accounting for unpaid expenses and uncollected revenues. [3] Major corporations prefer accrual accounting as it balances income over periods, while smaller companies and individuals often use cash accounting.

    Original Description:

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    This case study compares cash accounting and accrual accounting. [1] Cash accounting only records revenues when cash is received and expenses when cash is paid, while accrual accounting records revenues when earned and expenses when incurred regardless of the timing of cash flows. [2] Accrual accounting provides a more accurate picture of a company's financial situation by accounting for unpaid expenses and uncollected revenues. [3] Major corporations prefer accrual accounting as it balances income over periods, while smaller companies and individuals often use cash accounting.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    8 views1 page

    Corporate Case-5

    Uploaded by

    Vinushree J Pawar
    This case study compares cash accounting and accrual accounting. [1] Cash accounting only records revenues when cash is received and expenses when cash is paid, while accrual accounting records revenues when earned and expenses when incurred regardless of the timing of cash flows. [2] Accrual accounting provides a more accurate picture of a company's financial situation by accounting for unpaid expenses and uncollected revenues. [3] Major corporations prefer accrual accounting as it balances income over periods, while smaller companies and individuals often use cash accounting.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    of 1

    CORPORATE ACCOUNTING

    CASE STUDY : 5

    This timeliness of how when expenses and earnings were recorded is the key distinction
    among accruing and income statement bookkeeping. Whereas the accrued focusses on
    predicted sales and expenditure, the payment technique offers instantaneous acknowledgment
    of revenues and expenditures.

    BASIS OF CASH ACCOUNTING :

    According to this system, revenues will only be recorded upon that financial report upon
    receiving cash. Just when money is handed out in currency are expenditures documented.
    Enterprises as well as individuals frequently employ the currency approach for household
    income.

    ACCRUAL ACCOUNTING :

    Revenue is recorded by using methodology as soon as it is generated. The accrual accounting,


    as opposed towards the cash accounting, acknowledges income whenever the item or service
    is provided to a consumer also with assumption than payment The payback accounting, as
    opposed towards the accruals concept, acknowledges income whenever the item that
    commodity is provided to a consumer well with assumption than payment In other words,
    funds are tracked prior to their being received.

    KEYPOINTS :

    • Whenever operations are performed first before funds are collected or dispersed,
    accrual - based documents costs and expenditures.
    • Whenever the cash necessary for these kind of activities is tallied up or spent, cash
    basis reflects both costs and expenditures.
    • Funds payment and deferred revenue are included in revenue recognition, which gives
    a more realistic picture of a company's financial situation.
    • Due to its ability to balance out income over period, the accruing approach is the one
    that major corporations prefer to utilize.
    • Smaller companies and individual operators frequently employ the retained earnings
    strategy.

    You might also like