Question

explain different methods of accounting system​

Answer 1

Answer:

Accounting method refers to the rules a company follows in reporting revenues and expenses. The two primary methods are accrual accounting and cash accounting. Cash accounting reports revenue and expenses as they are received and paid; accrual accounting reports them as they are earned and incurred.

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Answer 2

Explanation:

Accounting method refers to the rules a company follows in reporting revenues and expenses. The two primary methods are accrual accounting and cash accounting. Cash accounting reports revenue and expenses as they are received and paid; accrual accounting reports them as they are earned and incurred.

Understanding the Accounting Method

Cash accounting is an accounting method that is relatively simple and is commonly used by small businesses. In cash accounting, transaction are only recorded when cash is spent or received. In cash accounting, a sale is recorded when the payment is received and an expense is recorded only when a bill is paid. The cash accounting method is, of course, the method most of us use in managing personal finances and it is appropriate for businesses up to a certain size. If a business generates more than $5 million in annual sales, however, it must use the accrual method, according to Internal Revenue Service rules.