CASH ACCOUNTING Cash accounting method needs transactions to be recorded when

Cash accounting cash accounting method needs

This preview shows page 3 - 4 out of 4 pages.

CASH ACCOUNTING [Cash accounting method needs transactions to be recorded when receiving cash from a customer, or when an expense occurs such as payment made to suppliers. Cash accounting is not an accepted form of recording, but the IRS is uneasy with this because it is to alter reported earnings but at this point, they are still allowing it(S,2015). There are some limitations as when cash accounting should not be used. They include: if a company reports inventory at year-end, not allowed for “C” corporations, tax's shelters, or partnerships that have “C” corporation’s partners. CONCLUSION In conclusion, the cash accounting method is used when there are fewer complex transactions to record and only record when there is an outflow or inflow of cash. The accrual method is used when there are any transactions that occur and need to be recorded.
Image of page 3

Subscribe to view the full document.

[SHORTENED TITLE UP TO 50 CHARACTERS] 4 References Accounting Tools.(2016). Accrual Accounting. Retrieved from Accounting Tools: Accounting Tools.(2016). The Cash Method of Accounting. Retrieved from Accounting Tools: S,S.(2015,August 1). Difference Between Cash Accounting and Accrual Accounting . Retrieved from Key Differences: - and-accrual accounting.html#comparisonchart
Image of page 4
  • Spring '16

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask You can ask ( soon) You can ask (will expire )
Answers in as fast as 15 minutes