cash basic accounting and accrual basic accounting

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Querist : Anonymous

Querist : Anonymous (Querist)

28 September 2016 Dear Sir,

What are the differences between cash-basis and accrual-basis accounting with example?

Amresh Joshi

Amresh Joshi (Expert)
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07 October 2016 Under cash basis system, the expenses paid income received during the current period are recorded whether there are related to past, present or future, where as in case of accrual basis, we record the expenses and income related to current year,whether these are paid or not or received or not respectively.
Example : Paid to A salary for 13 months during the current year: i.e Rs.13000/-

Entry under cash basis system
Salary A/C Dr 13000
To Cash A/C 13000

Where as in case of Accrual basis system:

Salary A/C Dr 13000
To Cash A/C 13000

and
Prepaid Salary a/c Dr 1000
To Salary A/c 1000

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