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Difference Between Accrual Vs Cash Accounting โ All You Need To Know
Accrual vs Cash Accounting are two different methods that are useful in recording transactions. Further, knowing the difference between these two can help you in understanding their effects on your business.
Particulars | Accrual Accounting | Cash Accounting |
Definition | It records the Income & Expenses immediately when it arises | The recording is done when there is an inflow or outflow of cash |
Method | Follows a double entry system of accounting in form of debit and credit | Follows a single entry system that records either inflow or outflow of cash |
Accounts Receivable & Payable | Records all the transactions including account receivable & payable | Records transactions only related to Cash. Therefore, doesn’t record accounts receivable & payable |
Income Statement | Shows higher level of Income | Shows a relatively lower level of income |
Accuracy | High Accuracy | Low Accuracy |
Suitable For | Suitable for large Companies | Suitable for micro and small businesses |