Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 42 - No. 6)
What is the main difference between the cash basis and the accrual basis of accounting?
Cash basis focuses on cash flow, while accrual basis focuses on revenue and expenses.
Accrual basis focuses on cash flow, while cash basis focuses on revenue and expenses.
Cash basis is always more accurate than accrual basis.
Accrual basis is only used by large companies.
Explanation
Cash basis accounting records transactions when cash changes hands. Accrual basis records revenue when earned and expenses when incurred.
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