Week 2Checkpoint - are incurred. In the accrual system,...

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Week 2Checkpoint: Accrual Method There are five major categories of accounts: assets, liabilities, net assets, revenues, and expenses. Even if the organization is nonprofit there are these five major categories. The accrual method of accounting is a complete financial picture, whereas cash accounting is a partial. Accrual accounting means that transactions are recorded when revenues are earned and when expenses are incurred. Cash and accrual are different by accounts receivable and accounts payable. With cash accounting no one knows the revenue or expenses. Accrual accounting is important because it has all the information it needs as it happens. When revenues are earned and when expenses
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Unformatted text preview: are incurred. In the accrual system, revenues is equal to cash because on a statement it is divided into two classes "operating" and "other". The statement shows separate revenues such as donations, contributions, and interest income. The cash flow statement is keeping track of the cash flow. Keeping track of the movement of cash knowing where, when, and how the cash needs occur; which are the best resources to meeting additional cash needs; and meet those needs when they occur. Keeping the cash flow management up to date is the key component in planning in the well-organized operation of all parts of the operation....
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This note was uploaded on 04/22/2011 for the course HSM 260 taught by Professor Dr.dave during the Spring '10 term at University of Phoenix.

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