Commercial accounting generally accepted accounting principles generally prescribe accrual basis accounting cash basis Describe bases accounting explain differences

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Cash payments for goods is one. The financial statements are not going to be affected if the transaction occurs entirely within a single accounting period. If the buyer settles the account on December 30th, the two methods would have the exact same outcome as far as end of year financial statements are concerned.

In general, some small businesses prefer the cash accounting method because of its simplicity. If these companies are not publicly traded, then they do not need to use GAAP or accrual accounting. Eventually, however, they may find that they want to use accrual accounting, that their bank demands it, or that they want to go public and they need to. Firms that remain small may never come to this point, but accrual accounting is more flexible, more accurate and more sophisticated so is generally a better method to use for any business, even small ones.

Works Cited:

No author. (2000) Cash vs. accrual accounting. Inc. Magazine. Retrieved April 17, 2012 from http://www.inc.com/articles/2000/04/19194.html[continue]

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"Commercial Accounting Generally Accepted Accounting Principles Generally Prescribe Accrual Basis Accounting Cash Basis Describe Bases Accounting Explain Differences" (2012, April 17) Retrieved August 1, 2015, from http://www.paperdue.com/essay/commercial-accounting-generally-accepted-79309

"Commercial Accounting Generally Accepted Accounting Principles Generally Prescribe Accrual Basis Accounting Cash Basis Describe Bases Accounting Explain Differences" 17 April 2012. Web.1 August. 2015. <http://www.paperdue.com/essay/commercial-accounting-generally-accepted-79309>

"Commercial Accounting Generally Accepted Accounting Principles Generally Prescribe Accrual Basis Accounting Cash Basis Describe Bases Accounting Explain Differences", 17 April 2012, Accessed.1 August. 2015, http://www.paperdue.com/essay/commercial-accounting-generally-accepted-79309

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