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Accrual basis accounting & the cash basis accounting

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1. You have started a sole-proprietorship business. It is a department store selling groceries. You receive payment for the sales made through either a credit card or cash. You pay your suppliers on a credit basis of 30 days.

To manage accounts for your sales and purchases efficiently, will you prefer the accrual basis accounting or the cash basis accounting? Discuss.

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Response discusses the accrual basis accounting & the cash basis accounting

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1. You have started a sole-proprietorship business. It is a department store selling groceries. You receive payment for the sales made through either a credit card or cash. You pay your suppliers on a credit basis of 30 days. To manage accounts for your sales and purchases efficiently, will you prefer the accrual basis accounting or the cash basis accounting? Discuss.

Accrual Basis accounting refers to the accounting method under which the transactions are recorded as and when it occurs irrespective of cash flow. Under cash basis transactions are recorded only when there is involvement of cash flow.

The ...

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