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    clueless123's Avatar
    clueless123 Posts: 6, Reputation: 1
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    #1

    May 26, 2008, 03:04 AM
    Accrual acounting
    Hi there,
    I have just starte to learn the concept of accrual accounting.
    I know many adavantages but I don't know one disadvantage of a small business using this method.

    I guess it's a hassle compared to cash accounting.
    delite's Avatar
    delite Posts: 202, Reputation: 3
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    #2

    May 28, 2008, 09:23 PM
    Not really a hassel. Accurals give a more accurate description of your financial positiion.for example you will have paid for certain expenses like rent and subsciptions thirty days after the first of the month. You are on the cash position from a cash position perspectative, you deduct immediately prepaid rent and subscription. On the accural you would record the liabilitywhich you do not pay until further out in the year when actual payment falls due Such payments are made on the accural basis.in essence you are mathching your payments with you liability (agreement)

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