Question

Give two disadvantages of cash basis of accounting and two disadvantages of accrual basis of accounting.

Answer 1

Disadvantages of cash accounting

• Cash accounting is not accurate because it doesn't include all the transactions.

• In cash accounting every is recorded

 

Disadvantaged of accrual accounting

• It lead to difficulties and deception and switching to accrual account is not easy

• Expenses and recognition of revenue is very complicated.