Explore BrainMass
Share

Explore BrainMass

    Cash and Accrual Accounting

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

    What is the difference between cash and accrual accounting? Which basis of accounting do most companies use, cash or accrual? Why? Which method is approved by GAAP? Why? Which method does the IRS prefer? Is it legal for an organization to keep two sets of accounting records? Why or why not? Please make sure if part of this question is answered. thank you.

    © BrainMass Inc. brainmass.com June 1, 2020, 4:53 pm ad1c9bdddf
    https://brainmass.com/business/cash-vs-accrual-accounting/cash-and-accrual-accounting-116079

    Solution Preview

    Cash Accounting is the accounting system whereby only cash receipts and payments are recorded on the books as they occur. Thus, no accounting records are made when goods and services are bought or sold on credit: the recording of the transaction is delayed until the cash payment actually takes place. Similarly, cash accounting does not generally recognize non-cash expenses such as depreciation. On the other hand, in accrual accounting recognition of revenue, expenses, ...

    Solution Summary

    The solution explains the difference between cash and accrual accounting? Which basis of accounting do most companies use, cash or accrual? Why? Which method is approved by GAAP? Why? Which method does the IRS prefer? Is it legal for an organization to keep two sets of accounting records? Why or why not? Please make sure if part of this question is answered. thank you.

    $2.19

    ADVERTISEMENT