Accural and Cash Basis

Accural and Cash Basis - Cash basis and accrual basis are...

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Cash basis and accrual basis are the two methods used to record the income and expenses of business during a certain period. Cash basis is a method where expenses are not recorded until services or supplies are paid in full. Using the cash basis method allow the company a more accurate picture of actual cash on hand, but this method can mislead the company to believe that long term profits are strong. According to our text, using the cash basis option may show strong sales and profits but in actuality sales could have been slow because all required payments were made during a certain month. An example of the cash basis method at Georgia State University child development center would bean cash advance that a staff member receives for supplies. The cash advance is immediately deducted from our expense accounting once the money is placed in our hands. Accural basis is a method where transactions are recorded once an order is made, services occur or supplies are delivered regardless of when the actual payment is made. The accrual
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This note was uploaded on 07/07/2011 for the course BUSINESS 350 taught by Professor Mitchell during the Fall '09 term at Troy.

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Accural and Cash Basis - Cash basis and accrual basis are...

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