Purchase Solution

Cash and Accrual Accounting

Not what you're looking for?

Ask Custom Question

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.

Purchase this Solution

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.

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, ...

Purchase this Solution


Free BrainMass Quizzes
Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Operations Management

This quiz tests a student's knowledge about Operations Management

Introduction to Finance

This quiz test introductory finance topics.

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.