17/12/2020
Content
What Is The Difference Between Cash And Accrual Accounting?
Accrual accounting measures a company’s performance and position by recognizing economic events regardless of when cash transactions occur, whereas cash accounting only records transaction when payment occurs. If you use the accrual basis of accounting and you sell a product on credit, your journal entry will record the date of the transaction as the date of the sale — not when you’re paid for the product. The entry would be listed as a current asset, even though your customer may still owe you. Similarly, if you bought supplies on credit, you’d record the expense on the date you purchased the supplies, not the …