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View Full Version : Cash basis vs accrual


gtp123
Oct 5, 2009, 10:42 AM
As I understand, when choosing between the cash basis of accounting or the accrual basis of accounting, the accrual basis will always give the most accurate up to date information. The only difference between the two is timing. What I don't understand is the effects that the cash basis has on income. Does it overstate or understate accounts receivable and accrued expenses payable in terms of accrual?

bgriffi3
Oct 6, 2009, 03:10 PM
Accured revenues are earned revenues that are unrecorded. The cash receipts for accrued revenues are normally received in the next accounting period.
Accrued Expenses are unrecorded expenses that have been incurred and for whixh cash has yet to be paid.