Therefore, cash accounting can both overstate or understate the condition of the business if collections or payments happen to be particularly high or low in one period versus another. Businesses using the accrual method to keep an accurate picture of accounts payable and receivable will maintain their ledgers according [...]
Many small businesses opt to use the cash basis of accounting because it is simple to maintain. It’s easy to determine when a transaction has occurred (the money is in the bank or out of the bank) and there is no need to track receivables or payables. Whenever a [...]
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