With the Accrual method, you need to record revenue when you earn it. The Accrual accounting method is a bit more complicated. What's the difference? The Cash accounting method is very straightforward: When cash comes in the door, we record it as revenue & as cash goes out the door, we record it as an expense. If you have not received a payment for an invoice, a Cash-Basis report does not include the income A Cash-Basis report shows income income, only if you have received cash and expenses. An Accrual-Basis report shows income regardless of whether your customers have paid their invoices and expenses, regardless of whether you have paid all your billsĬash Basis is a bookkeeper method in which you regard income or expenses as occurring at the time you actually receive a payment of pay a bill. In Accrual accounting, the time when you enter a transaction and the time when you actually pay or receive cash, may be two separate events. The best way to begin this blog topic is to discuss what on earth are we talking about?Īccrual Basis is a bookkeeping method in which you regard income or expenses as occurring at the time you ship a product, render a service or receive a purchase.
