Create a table comparing and contrasting the basic elements of cash and accrual accounting.How do the methods compare? How are they different? What are the strengths of each method? What are the weaknesses of each method? Include a column in your table to address each of the following: comparison, contrasts, strengths, and weaknesses.
Cash Bases of Accouting
Accrual Bases of Accouting
When Revenue Recorded
Under the cash basis of accounting revenues
are recorded in the financial statement in the period in which the cash is received from customers
Under the accrual basis of accounting revenues are recorded in the financial statement when they are earned and generally often occurs before
When Expanses recorded
Under the cash basis of accounting revenues
are recorded in the financial statement in the period in which the cash is paid
Under the accrual basis of accounting revenues are recorded in the financial statement when expanses are occur or when they expire
Who provide better Picture
Cash Basis of Accouting do provide as true income or liability picture of the company during the particular period as accrual basis gives
Generally Accrual Basis of Accouting provide better picture of the company during the particular period
availability of the method for use
This method is available for the use if a company has not more than $5 million of sales per year
This method is used by all large company for many reasons
tax reporting
When sales does not exceed $5 million, this method can be used
When sales exceed $5 million ,this method is compulsory to use
weaknesses or strengths
The main weakness of this method is that ,it does not provide true profitability during the period because revenues and expenses are recorded when they are actually received or paid
The main strengths of this method is that ,it provide true profitability during the period because revenues and expenses are recorded when they are occur
