Subject: MANAC-I

Submission Date: 30/10/2018

Title of the Project: Differentiate between Accrual basis of

accounting and Cash basis of Accounting

Section Name Roll No. Name of the Signature

Student
Introduction & Examples 17 Hrithik Agrawal
Difference 55 Maulin Shah
Difference 54 Vatsal Suthar
Example (7 transaction) 52 Prashant Valluvar
Example (7 transaction) & 60 Jaydeep Devpura
Conclusion
Introduction

Cash Basis Accounting (also known as Cash Accounting) and Accrual Basis Accounting (also known as
Accrual Accounting) are the two principal Accounting Methods of keeping track of an enterprise’s
income and expenses.

Cash Basis
Cash basis accounting records actual cash receipts & actual cash payments.
Thus, cash accounting recognizes income increases & decreases when cash is received and paid.

Profit Revenue Expenses

Received Paid

Accrual Basis
Accrual basis accounting is the method of recording business events and activities when they occur rather
than when cash is received or paid.
Thus, accrual accounting recognizes revenue and expense when goods are sold or when services are
rendered.

Revenue Expenses
Profit
Earned Incurred
Conclusion

Accrual basis accounting is superior to cash basis for measuring the performance of a
business because it ties income measurement to sales.
In contrast, cash basis accounting is influenced by many factors that may have little to
do with the performance of the entity. Cash basis accounting is not permitted by
generally accepted accounting principles, income tax authorities, etc.