Accounting Cash vs Accrual is a fundamental concept that exists in accounting and finance circles. On the surface, it seems like an easy distinction to make: cash accounting is when income and expenses are recorded when money is exchanged, while accrual accounting involves recording income and expenses when they occur, regardless of when the payment is made.
However, when we dig deeper, things become more complex. Cash accounting shows a clearer picture of actual available funds, while accrual accounting may provide a better indication of how a business is performing over time, since income and expenses are accounted for as they happen.
At the end of the day, understanding the difference between cash and accrual accounting can help you make smarter decisions about your business operations and keep your financials in check.