Basic query in accounting

This query is : Resolved

pavankumar (Querist)
Follow

20 September 2013 Respected Sir,
Q1)When we say Accounts are prepared on Cash basis or Accrual basis, what does it exactly means?
Q2)Can Income and Expenditure can be prepared on either Cash Basis or Accrual Basis?
Q3)In Accounting subject, by default which method do we adopt?

I will be very much thankful to u.

Nitesh Parmar

Nitesh Parmar (Expert)
Follow

20 September 2013 Cash basis and accrual basis means charging of expenses in P&L. when actually paid or when liability for same has been arised, like Interest, Interest may be due on particular date and may be paid on some other date then how to show the interest in p&l.
If we show it in P&l when it is actualy paid then it will be cash basis.
and if we show it in P&l when liability for same as been arised then it will be of accrual basis.

Online classes for CA CS CMA