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asimko_501
Jan 19, 2008, 05:34 PM
What is the difference between a cash-basis income statement and an accrual-basis income statement? For example, how would I record a cash basis income statement for April, May, and June, if the company started in April? HELP!
delite
Jan 19, 2008, 09:28 PM
What is the difference between a cash-basis income statement and an accrual-basis income statement? For example, how would I record a cash basis income statement for April, May, and June, if the company started in April? HELP!
cash basis accounting does not work well for companies that have inventories, sell on credit,etc, In these instances you will need to use the accrual method of method.The effect the accrual will have over the cash method is that the accrual more accurately reflects the company's true financial position. For financial purposes most lending instituitions will require the accrual method of accounting to secure financing.