Browse over 20 million
homework answers & study documents

Accounting

Discussion topics: Explain the difference between the accrual basis of accounting and the cash basi

Type

Homework

Rating

Showing Page:
1/3
Running Head: CASH BASIS AND ACRUAL BASIS DIFFERENCE 1
The difference between cash basis and accrual basis of accounting
Name
Institution
Nate

Sign up to view the full document!

lock_open Sign Up
CASH BASIS AND ACRUAL BASIS DIFFERENCES
2
The difference between cash basis and accrual basis of accounting
The cash basis involves reporting of revenues on the income report in the time in which
the money is received from buyers. Expenses are also reported on income statement after the
cash is paid out. In accrual basis, revenues are reported on income statement when earned. This
happens before the money is received from buyers. Expenses are also reported on income
statement in the time when they happen or when they expire. This is often in a time different
from when the payment is made (Bowen, Burgstahler & Daley, 1987).
The accrual basis is best because it offers a better picture of the profits of the company on
accounting period. This is because the income statement made under accrual basis reports all the
actual revenues earned during a period and also all other expenses uncured in the process of
earning the revenues. This basis also offers a better picture of the financial position of the
company at appoint in time or moment. This is because all assets earned are reported and
liabilities incurred reported (Kwon, 1990).

Sign up to view the full document!

lock_open Sign Up
CASH BASIS AND ACRUAL BASIS DIFFERENCES
3
References
Bowen, R. M., Burgstahler, D., & Daley, L. A. (1987). The incremental information content of
accrual versus cash flows. Accounting Review, 723-747.
Kwon, Y. K. (1990). Accrual versus cash-basis accounting methods: an agency-theoretic
comparison. Journal of Accounting and Public Policy, 8(4), 267-281.

Sign up to view the full document!

lock_open Sign Up

Anonymous
I was on a very tight deadline but thanks to Studypool I was able to deliver my assignment on time.

Anonymous
Heard about Studypool for a while and finally tried it. Glad I did caus this was really helpful.

Anonymous
I always get good papers on this site. They are detailed and address all the requirements I need.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4