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Accrual and Cash Accounting

Cash account and accrual accounting are two separate methods that are similar in many aspects except when it comes to debits and credits. Cash accounting is also known to be called cash basis accounting. This approach allows for the recognition of income at the time it is received. That means that invoiced income is not counted as an asset until payment for the invoice has been received and vice versa for debits and expenses. Accrual accounting does not recognize any income until it is actually earned. Goods and services are posted and counted as assets as they are invoiced. Cash basis accounting is simple and cheaper to do than accrual accounting. While it does provide an accurate representation of cash…