Annual Cash Basis Homework help
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What is Cash Basis?
Whenever any actual cash is received or paid out by the business then cash basis is an accounting method that generally recognizes the revenues and expenses. This is totally opposite to accrual basis where the accounting is done based on records and not when the cash is actually received. In that case even the liabilities are considered when incurred and not paid. In this article for annual cash Basis homework help we talk about the cash basis and its aspects in accounting.
Example for a Cash Basis Accounting System
An example about a construction firm in our annual cash Basis homework help article will clear the idea of cash basis accounting method. Let’s suppose that there is a construction firm that has received a big contract will be paid only after the completion of the project. If that firm uses the cash basis method it can identify the revenue from its project after its completion. The intermittent payment is also recorded.
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Benefits of Annual Cash Basis Homework help
• Simplicity in operation
• Inexpensive in nature
• Used for small business owners who cannot afford accrual accounting method
• Accurate picture of in hand cash can be achieved form it.
Limitations of Annual Cash Basis
With perks come cons. Some are listed below in this annual cash Basis homework help article.
• Business health and growth can decrease
• Influx of cash when the sales are at their low
• Inaccurate views of asses trends
• Finance becomes harsh due to inaccuracy.
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