What distinguishes accrual accounting from cash basis accounting?
Regardless of when money is transferred, revenues and costs are recognized in accrual basis accounting as soon as they are generated or spent. Contrarily, revenue and expense data is only recorded in cash basis accounting—that is, when actual cash is received or paid. While cash basis accounting is more straightforward and easier for small firms to execute, accrual basis accounting gives a more accurate view of a company's financial performance.
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