Earlier topic on accruals concept and profit versus cash concept refers.
Basically, a majority of small businesses use the cash method of accounting since it is simple to understand.
- The business records the earnings only when the cash is received and records all its expenses when the check or cash is issued. [ Payments are considered made when they are mailed and also includes payment by credit card].
- One may use a combination of the cash method and accrual method if this combination clearly shows his or her income and expense transaction and is used consistently.
- However the business owner cannot switch between cash, accrual or combination accounting.
|
Answer to Cash versus Accrual accounting question Jim Co
[refer to MORE articles on accounting concepts]
|