Accrual Method - the revenue like payments made by the...

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Evelyn Harris HSM 260 Accrual Method Checkpoint: Due Date: Day 4 Accrual Method Accrual Accounting is more accurate on the timing of the reports on reported expenses and revenue. With cash accounting for example; when goods are shipped out of a warehouse directly to a customer and only receives a receipt of purchases, the monies are not wrote into the books as revenue until the money is actually received but if it is Accrual accounting methods that are being used then the principles and recognition of funds would satisfy the books and can be documented at that time. The Accrual system is never equal to cash in no way; the reason is because of the fact that cash accounts depend on a receipt of
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Unformatted text preview: the revenue like payments made by the client or deposits. The cash accounts are related to cash in general but on the Accrual system its the revenue because it is based on a certain period in which they are earned while the cash portion would be based on payments and the client invoices billed for services. The importance of the statement of cash flow within the financial management of an organization is the factor that companies use accrual accounting and therefore use income statements for each quarter and it may not necessarily have to reflect any changes in the cash asset position....
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This note was uploaded on 04/01/2010 for the course MAT 116 116 taught by Professor Waynn during the Spring '10 term at University of Phoenix.

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