Question

Create a diagram comparing accrual and cash accounting. Also include a 350- to 700-word summary of the differentiation and uses of the two.

Answer 1

Solution:-

Conclusion:-

The gap in the occurrence and recognition of revenue and expense is the main difference between cash accounting and accrual accounting. The former is generally used by a small business person, non-profit organisations and government agencies, etc. while the latter is preferred by the big enterprises because the transactions occur rapidly. The next difference is that the organisations where the records are kept on cash basis accounting enjoy tax benefit whereas in accrual system the entity has to pay tax on the income which is still not collected.