Explore BrainMass

Explore BrainMass

    Cash or Accrual Basis of Accounting

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Briefly explain which basis of accounting and the reasons why that basis of accounting is not desirable for most organizations.

    © BrainMass Inc. brainmass.com March 4, 2021, 10:38 pm ad1c9bdddf

    Solution Preview

    Thank you for choosing BrainMass.

    The Basis of Accounting Definition:

    Method of recognizing revenues and expenses. Under the accrual basis of accounting, revenues are recognized as goods are sold and services are rendered regardless of the time when cash is received. Expenses are recognized in the period when the related revenue is recognized and the difference is the net income figure for a particular period. Under the cash basis of accounting, revenues are recognized only when money is received and expenses are recognized only when money is paid. Cash basis financial statements, however, distort ...

    Solution Summary

    Discusses cash and accrual basis of accounting.