Cash Vs. Accrual Accounting Student Instructor

Cash VS. Accrual AccountingStudent NameCourseDateInstructorCash VS. Accrual AccountingAccounting has two forms, which include accrual and cash accounting. Cash accounting involves reporting revenues on the income statement upon receiving the cash. In contrast, accrual accounting involves matching expenses with the related revenues, which the business reports upon incurring the expenses. The main advantage accrual accounting is that all related expenses have to be recorded in the same period. The method is also more accurate and produces more accurate and trustworthy financial statements. The main disadvantage is that it involves more bookkeeping as compared to the cash method (Jeff, 2015). The cash method is simpler in maintaining the business’ books and records. The only events that need recording of expenses and revenue are the cash or receipt of payment. The disadvantage is that the prepared statements may not truly reflect a business’ performance because a business can report the expenses and revenue related to the same transfer in two different periods. Accrual accounting provides the most useful and accurate financial information because the business only records the income the time the customers have to make the payment. In addition, the financial statements adequately