Discussion W1.docx - Good evening class! For my discussion...

Good evening class!
For my discussion I found Cash Basis Acounting interesting. From what research I have done, and
through several articles Cash Basis Accounting is more for smaller businesses that deal in cash. This is a
more simple accounting structure and used when expenses and revenue is directly dealt with in cash.
There is not a record of any accounts payable within this system, unlike Accrual Basis Accounting which
includes account receivables. What I found most interesting in my search was according to
Freshbooks.com if you have any inventory the IRS will require you to use Accrual Basis unless certain
criteria is met. (FreshBooks, n.d.)
An example of this would be: You own a small construction company with few employees and you bid for
a contract on a house to be built in a new area. Once you win the bid, you will not get paid until services
are completed that you agreed to with the bid. ( Cash Basis Accounting: Definition, Example, Vs. Accrual ,
2020)