ACC 497 Week 1, Individual Assignment - Assessed Discussion Question

May 8th, 2015
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ACC 497 Week 1, Individual Assignment - Assessed Discussion Question

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Brain Teasers Number 4Cash or Accrual AccountingThe search for Financial Accounting Standards Board (FASB) standards statement is whether cash or accrual accounting which one is the best, in my opinion that accrual accounting is the best , but by all indication on the codification site and the Generally Accepted Accounting Principles (GAAP) this is their opinion also that accrual accounting is superior over cash accounting. When researching which one would be better I searched and I found that cash-basis accounting , record all transactions on the books when the cash is received from the customers to the company whether it for purchases or services. The cash payment can be in a form of cash, check, credit card, and electronic transfer. Most companies that use cash basis are small companies. Whereas, accrual accounting it is recorded on the books when it happen, even if no cash changes hands. For example if you sell an item on credit , the transaction will immediately be enter into an account receivable account until the payment is received. If the company buys goods on credit, it will be immediately enter into the accounts payable account until the company pay for it. Most companies use the accrual accounting method because it monitors cash flow on a weekly basis and shows if the company has enough money to operate. Most large companies us accrual accounting method.Accounting Theory IssueCash basis is mostly used for small co

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