University of Phoenix Week 3 Bookkeeping Approaches Diagram Paper

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Business Finance

University of Phoenix

Description

Create a diagram comparing accrual and cash accounting. Also, include a 350- to 700-word summary of the differentiation and uses of the two.

Cite 3 peer-reviewed, scholarly, or similar references to support your summary.

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Explanation & Answer

Hello Pal, I have finished with a few hours to spare for any revisions that you might suggest. For this assignment, I also included the Turnitin Report.

BOOKKEEPING APPROACHES

1

Bookkeeping approaches
Name
Institution affiliated

BOOKKEEPING APPROACHES

2
Bookkeeping approaches

Bookkeeping is an essential part of business firms. It facilitates the determination of a
company's worth, including computing revenues and profits. There are two basic approaches
used in accounting: the accrual and cash methods. The fundamental difference between these two
approaches lies in the timing of receipts and payments. The table below summarizes the
differences between the two models.
Accrual accounting

Cash accounting

Reports receivables as assets when the firm

Only reports receivables as assets when the

earns them

firm actually cashes them

Reports account payables as liabilities when

Only reports payables as liabilities when the

the firm incurs them

firm makes a payment

Reports all revenues at the time of earning

Only records revenues when the firm makes
actual cash receipts

Reports expenses at the point they match

Only reports expenses when the firm makes

revenues or when the firm consumes them

an actual payment

Net income is the difference between

Net income is the difference between cash

revenues and expen...


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