REFLECTIVE PAPER - FINAL

REFLECTIVE PAPER - FINAL -...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Cash Versus Accrual Accounting Methods   Recognizing The Different Transactions ACC205 Principles of Accounting I April 29, 2011
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Cash Versus Accrual Accounting Methods   Abstract In the near future I plan on opening up my own personal business and like many businesses my main goal is to make a profit. In the last few weeks of class in Principles of Accounting I was able to see what goes on behind the scenes with a company and how accounting books are balanced and how payments are posted. The information that was retained will in return help me with deciding the types of services and how much to charge in the business in the future. For my final assignment, I will be discussing the difference between the two basic methodologies for reporting transactions: the cash basis accounting method and the accrual accounting method.
Background image of page 2
Cash Versus Accrual Accounting Methods   In my opinion, the simplest way to record accounting transactions would be that in the cash basis accounting. By definition it records all cash receipts and cash payment transactions - cash receipts are treated as revenues and cash payments are treated as expenses. This method ignores receivables, payables, and depreciation. Small businesses that provide a service to customers are more than likely to use this method because they don’t hold any inventory items. It also provides business owners the ability to maintain an accurate record of the cash flow of their company. Advantages of using the cash basis accounting are that each transaction is fairly simple. It eliminates excessive journal entries and it tracks cash flows much easier than accrual accounting. As a small business grows in profit, owners are able to see the growth through their operational
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 6

REFLECTIVE PAPER - FINAL -...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online