Accrual Basis vs Cash Basis Accounting for Non Accountants

Accrual Basis vs Cash Basis Accounting for Non Accountants

There are two basic accounting methods available in business - Cash or Accrual.

With the cash method of accounting, income is recorded only when you receive cash from your customers. You record an expense only when you write the check to the vendor.

With the accrual method, income is recorded when the sale occurs, whether it be the delivery of a product or the rendering of a service on your part, regardless of when you get paid. On the other hand, you record an expense when you receive goods or services, even though you may not pay for them until later.

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