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  • Confras 3 Answer

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    Cleo Meguel Abogado
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    The document compares and contrasts the cash basis and accrual basis of accounting. The cash basis recognizes income when received and expenses when paid, regardless of when earned or incurred. The accrual basis recognizes income when earned and expenses when incurred, regardless of when received or paid. The author prefers the accrual basis as it provides a more accurate financial picture by matching revenue and expenses to the periods in which they are earned and incurred through application of the matching principle.

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    The document compares and contrasts the cash basis and accrual basis of accounting. The cash basis recognizes income when received and expenses when paid, regardless of when earned or incurred. The accrual basis recognizes income when earned and expenses when incurred, regardless of when received or paid. The author prefers the accrual basis as it provides a more accurate financial picture by matching revenue and expenses to the periods in which they are earned and incurred through application of the matching principle.

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    11 views1 page

    Confras 3 Answer

    Uploaded by

    Cleo Meguel Abogado
    The document compares and contrasts the cash basis and accrual basis of accounting. The cash basis recognizes income when received and expenses when paid, regardless of when earned or incurred. The accrual basis recognizes income when earned and expenses when incurred, regardless of when received or paid. The author prefers the accrual basis as it provides a more accurate financial picture by matching revenue and expenses to the periods in which they are earned and incurred through application of the matching principle.

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    © All Rights Reserved
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    CONFRAS 3

    ASSESSMENT I

    1. Compare and contrast the cash basis and accrual basis of accounting.
    Answer
    - The cash basis and accrual basis of accounting are two different
    methods used to record accounting transactions. The core underlying
    difference between the two methods is in the timing of transaction
    recordation. Under cash basis, income is recognized when received
    regardless of when earned and expense is recognized when paid
    regardless of when incurred. Under accrual basis, income is
    recognized when earned regardless of when received and expense is
    recognized when incurred regardless of when paid.

    2. What basis of accounting do you prefer? Explain.


    - I must prefer accrual basis of accounting, though cash basis is more
    easier than accrual basis but this method gives the most accurate
    picture of financial reports in the company. Furthermore, this
    method applies the matching principle-matching revenue with
    expenses in the time period which revenue earned and the expenses
    incurred.

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