Basic accounting: Cash vs Accrual Accounting
Are you trying to improve the cash flow in your business? Are you seeing signs of a low or diminishing cash flow in your financial statements? Don’t wait until it’s too late. It’s not just the business making money that is important but it comes down to methodologies. Basic bookkeeping tips can be vital for total performance of your books.
Cash vs Accrual Accounting
Cash method is when the business records sales/revenue once the cash is actually received from the customer; and records expenses when they actually pay for them.
Accrual basis is when the business records the sales when they are earned (e.g. when the service is performed or the product is shipped) and the expense when the business receives the good or service.
The cash basis is closest to what the company’s bank account would look like on any given day. Sales = money deposited into bank. Expense = money removed from bank.
Keeping your books in order is a priority for any business but if you are looking for ways to improve your cash flow position there are people around to help.
LUXA Enterprises offers outsourced accounting services for small businesses in the Tulsa and surrounding areas. If you’re considering a short or long-term approach to outsource accounting, give us a call for more information at 918-928-7288.