Here’s a table highlighting the key differences between accrual and cash basis of accounting:
| Feature | Accrual Basis Accounting | Cash Basis Accounting |
|---|---|---|
| Recognition of Revenue | In accrual accounting, revenue is recognized when it is earned, irrespective of when cash is received. | On the other hand, cash basis accounting recognizes revenue only when cash is received. |
| Recognition of Expenses | Accrual accounting recognizes expenses when they are incurred, aligning with the matching principle, even if the corresponding cash payment occurs later. | Cash basis accounting records expenses only when they are paid, disregarding when the expenses are actually incurred. |
Here’s a table highlighting the key differences between Accounting vs Accountancy:
