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Cash Verses Accrual: Are They Alike, or Is There a Difference? Essay

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Below is an essay on "Cash Verses Accrual: Are They Alike, or Is There a Difference?" from Anti Essays, your source for research papers, essays, and term paper examples.

Cash Verses Accrual: Are They Alike, Or Is There a Difference?
Arline Tondre
ACC205: Principles of Accounting I
Instructor Emily King
December 19, 2011

Cash Verses Accrual: Are They Alike, Or Is There a Difference?
      Although a person anxiously wants to open a business, that person has to be aware of how that company is going keep track of what is spent and what is earned. Most people that open a small business usually deal with cash sales only. However, in today’s economy, customers want to be able to buy, or repair items by credit. Whether cash is used, or credit, there are ways to show if cash and accrual are alike, or if a difference occurs in the entry of the company’s books.      
      First, let us look at cash and the basis of accounting in this manner. Companies that have customers that use cash as a payment have to recognize the cash payment by previously recording it in their financial statement. Realizing this transaction is to collect that cash from the sale or the service. The flow of cash is the most liquid (easiest) of the assets and a company needs to keep a tight control over the flow in order to control the security and usage of it. The separation of duties from accounting and the actual sales should be done by different people for security measures that protect the company from theft and fraud. Plus, audits should be done frequently for the company’s safety. (p. 355). To mention this should be a safety measure whenever speaking about cash in any business.
      Whenever a payment is given on a cash sale, a business receives the cash on the same day, the revenue is posted and a deposit should be made in order for the bank to credit the company’s account. The only other issue with a cash basis for a company is making sure that there is enough cash in the bank to be able to pay/buy any assets that the company might have. An example would be stock orders/inventory. Liabilities would be employee salaries’ expense, rent expense,...

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"Cash Verses Accrual: Are They Alike, or Is There a Difference?". Anti Essays. 13 Dec. 2018

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Cash Verses Accrual: Are They Alike, or Is There a Difference?. Anti Essays. Retrieved December 13, 2018, from the World Wide Web: http://parimatch-stavka7.com/free-essays/Cash-Verses-Accrual-Are-They-Alike-311430.html


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