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Instructions
Answer the following question.(1st question) What are the differences between cash and accrual basis accounting? Provide an example of each type. Briefly explain why a company might need to adjust entries in the general ledger.
Answer
Difference between an accrual and cash basisGenerally, the accrual and cash basis are models that are used in accounting to record accounting transactions. The primary difference between these two methods lies in the time it takes to recognize revenues and expenses. In reference to the accrual system, expenses are recorded after consumption while revenue is recorded after earning. In the accrual system, there is also matching between expenses and revenue and offers precise and accurate financial representations of accounting transactions. The accrual system is often used by large companies as it is preferred when tax reports exceed 5 million dollars. The accrual method is also preferred since it simplifies the auditing of organizations financial statements easily matches the financial resu...
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