Question

what is accrual basis of accounting write three advantages ​

Answer 1

The accounting method under which revenues are recognized on the income statement when they are earned (rather than when the cash is received) is known as accrual basis of accounting .

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 helps a company to maximize its operational abilities by spreading out its revenue recognition and receivables.
• In general, accrual accounting provides for a better sense of a company's overall financial health than the cash basis accounting method.

hope it helps..

Answer 2

Answer:

under this basis, incomes are recorded when they are earned or accured, irrespective of the fact weather cash is received or not, e.g., sales made on credit will be included in the total sales of the period. similarly, expenses are recorded when they are incurred or become due and not when the cash is paid for them