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Introduction to book-keeping & Accountancy
The document explains two accounting methods: cash basis and accrual basis. Under cash basis accounting, revenues and expenses are recognized when cash is received or paid, respectively. In contrast, accrual basis accounting recognizes revenues when earned and expenses in the period related to the recognized revenue.
Introduction to book-keeping & Accountancy
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- 8. 1. Cash BasisAccounting Under The Cash Basis Accounting, Revenues And Expenses Are Recognized As Follows: Revenue Recognition: Revenue Is Recognized When Cash Is Received. Expense Recognition: Expense Is Recognized When Cash Is Paid. KP'S Group Tuition 8
- 9. 2. Accrual BasisAccounting : Under This, Revenues And Expenses Are Recognized As Follows: • Revenue Recognition: Revenue Is Recognized When Both Of The Following Conditions Are Met: A. Revenue Is Earned. B. Revenue Is Realized Or Realizable. • Expense Recognition: Expense Is Recognized In The Period In Which Related Revenue Is Recognized. KP'S Group Tuition 9
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