Grantham University Company ABC Accounting Methods Article Discussion

zbafgre15

Business Finance

Grantham University

Question Description

There are two types of basic accounting methods: Cash Base Accounting and Accrual Base Accounting. Find an article that discusses on an organization’s accounting methods (cash-based or accrual-based) or provide a real-life example. Then, share with the class the selected example’s basic accounting method and the method’s characteristics.

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Final Answer

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Running Head: ACCOUNTING METHODS

1

Accounting Methods
Name
Course
Institutional Affiliation:

ACCOUNTING METHODS

2
Accounting Methods
Introduction

This paper explores basic accounting methods, cash accounting and accrual-based
accounting as used by organizations. It makes use of an example regarding Cash Accounting, to
define it, elaborate its main characteristics as well as the benefits and demerits it presents as an
accounting method.
Cash Accounting
The example explored given looks at Company ABC which sells finished products
valued at $200,000. However, of those products, $100,000 worth of them are sold in cash while
another half valued at $100,000 are sold on credit and thus not paid for at the time. Since the
company uses Cash-based Accounting, it records only the $100,000 from the cash sales as cash
revenue, an...

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