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CBSE Class 11-commerce Answered

Differentiate between cash basis of accounting and accrual basis of accounting.
Asked by Topperlearning User | 09 Jun, 2016, 12:49: PM
answered-by-expert Expert Answer

Cash Basis of Accounting

Accrual Basis of Accounting

Only cash transactions are recorded in the books of accounts

All cash and non-cash transactions are recorded in the books of accounts

Correct profit or loss is not ascertained because it records only cash transactions

Correct profit or loss are ascertained because of the complete record of all the transactions

Entries are made only when cash is received or paid

Entries are made on accrual basis i.e. all transactions are recorded in the books of accounts whether incurred or earned

It is rarely used

It is widely used

It is recognised under Companies Act, 1956

It is not recognised under Companies Act, 1956

 

 

 

Answered by | 09 Jun, 2016, 02:49: PM
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