Accrual+Method - A statement of cash flow is a very...

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Running head: Accrual Method 1 Accrual Method Axia College of University of Phoenix
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Accrual Method 2 Accrual Method The difference between the cash basis of accounting and the accrual method is that the accrual method accounts for funds that are incoming or outgoing even if the actual transaction has not taken place yet. An example could be grants; if an organization has been awarded a grant but has yet to receive the funds in the accrual method the funds would be accounted for. In a cash basis system the grant funds would not be accounted for until they are received. In an accrual system revenue does not equal cash because this type of system revenue and expenses are based on the period in which they are earned, while cash basis is based on actual payments.
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Unformatted text preview: A statement of cash flow is a very important tool for human service organizations. It provides the organization the details about whether or not they are making enough to cover their operating expenses. The cash flow statement can also provide information to the organization about future expenses and if the current income will be sufficient to cover operating expenses in the future (Martin L. 2001). Accrual Method 3 Reference Martin L. (Ed.). (2001). Financial Management for Human Service Administrators . [University of Phoenix Custom Edition e-Text]. : Pearson Education . Retrieved July 15, 2010, from HSM260....
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