In the cash method, all earnings are recognized in the duration they are obtained, and prices are taken off when they are really paid. Think about it as identifying earnings when the deposit is made to the bank, and identifying prices when the cheque is composed to pay the bill.With the accrual method, earnings are recognized when the sale is made, usually when the statement is sent out to the customer, and prices are recognized when the costs are sustained, usually when an order is put or when goods are obtained.
Further reading - http://www.accountingtoday.com/channels/accounting_news.html
No comments:
Post a Comment