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Cash Basis Accounting Coursework Example | Topics and Well Written Essays - 250 words

Cash Basis Accounting - Coursework Example

The coursework "Cash Basis Accounting" talks about the cash basis accounting particularly when it is appropriate, petty cash fund and the age of accounts receivable particularly on what basis they are determined. The cash basis accounting is used by most of the sole proprietors as well as businesses without inventory. The system is considered appropriate for a small service company, cash-based business or small businesses. On the cash basis, accounting revenue is recognized once cash is received. On the other hand, in accrual accounting expenses tend to be recognized when cash is paid. Cash basis accounting differs with the accrual basis accounting in some ways. In cash basis accounting, revenues are recorded on the income statement once cash is received while in accrual-based accounting it is recorded when cash is earned. Cash earned entails cash received from customers. In cash basis accounting expenses are reported once cash is paid out while in accrual-based accounting expenses are reported when they expire or occur.

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