What Should I Use – Cash Basis Or Accrual Basis Accounting?
I have many clients that are unsure about what to use for their business bookkeeping a cash basis or an accrual basis standard of accounting. The only difference from these too types are when the money received or payment made are credited or deducted from your accounts. In cash basis you deduct or credit immediately once the payment is made or received in accrual it is only deducted or credited with the service is completed or the payment is actually paid out. Here are a few examples first lets start with credits. Let’s say a wedding photographer books a wedding and takes 50% up front a $1000.00 deposit but the wedding is not for another 8 months. If the photographer was using cash basis accounting the $1000.00 would be counted on their books as soon as the deposit was received and the remaining balance when it is received in 8 months. If the same photographer was using accrual basis accounting then he would not count the deposit in his books until the services where completed even th
