Question

1. What is cash basis accounting?
2. State the advantage of cash and accrual basis of accounting (point 4
3. Difference between and cash and accrual any 3 point.
4. Explain the following in detail: Objectivity concept; Convention of full disclosure;
Convention of prudence

answer shortly ​

Answer 1

1) The cash method of accounting, also known as cash-basis accounting, cash receipts and disbursements method of accounting or cash accounting records revenue when cash is received, and expenses when they are paid in cash.

2) Accrual accounting has several advantages, most of which are related to accurate income and expense reporting: It provides an accurate picture of overall cash flow for the business. ... Accrual accounting reflects that income and expenses generated in one month can carry over into the next month or even longer.

3) The main difference between accrual and cash basis accounting lies in the timing of when revenue and expenses are recognized. The cash method is a more immediate recognition of revenue and expenses, while the accrual method focuses on anticipated revenue and expenses.