Presented by :Sipu Sharma Biswabhushan Pradhan Aparna Tejasweta Archit Gupta

Accounting Basis

Cash

Accrual

 Monetary Cash Cash

Transaction.

Receipts are Revenues.

Payments are Expenses.

 Reliability. Recording

Transaction is simple.

 True

performance of the company.

Measurement Mercantile

of non-cash resources.

System.

Sipu Stores sold stationery to the Department of Commerce Utkal University amounting to Rs.2000 on march 25th , 2010. The credit period was one month and the cash was received on april 25th,2010.In accrual basis, the sale is recorded on 25th march and is treated as the income of the month of march, but under cash basis income is recorded on 25th april i.e. the date of receipt of cash.

CASH BASIS

ACCRUAL BASIS

Revenues are recorded when they are received, which may be before or after they are earned. Expenses are recorded when they are paid, which may be before or after they are incurred. Financial statements reflect revenues and expenses based on when transactions were entered rather than when revenues were earned or expenses incurred. No receivables are recorded. No payables are recorded. No method of tracking partial payments is available.

Revenues are recorded when they are earned, which may be before or after they are received. Expenses are recorded when they are incurred, which may be before or after they are paid. Financial statements match revenues to the expenses incurred in earning them, and more accurately reflect the results of operations. A receivable is recorded when payment is not received at the point of sale. Payables are recorded when payment is not made at the time of purchase. Revenues and expenses are recorded in full, even though partial payments may be made over extended time periods.

Primary Advantage. Accuracy. Recording the Revenue. Track of Accounts Receivable. Financial Reports. Microsoft Office of Accounting.

As per our study we would opt Accrual Basis rather than Cash Basis of Accounting.