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Financial and Managerial Accounting CSE Day 01 (Fall 22)
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ACT (SK--223)
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Financial statements are prepared using which basis of Accounting and why? Explain.
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Financial statements are prepared using which basis of Accounting and why? Explain.
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Financial statements are prepared using which basis of Accounting and why? Explain.
by Md Rayhan - Wednesday, 23 November 2022, 2:20 PM
Number of replies: 0
An accounting principle that, regardless of when the associated cash flows occur, recognizes revenue when performance commitments are met and expenses when they are incurred. However, some smaller businesses (and the majority of individual taxpayers) use the streamlined Cash basis of accounting, which is an accounting basis that recognizes revenues when the cash is received from customers and expenses when the money is paid to suppliers. While the majority of entities prepare financial statements using accrual basis accounting, some smaller businesses (and the majority of individual taxpayers) use the cash basis of accounting instead. When financial statements are prepared using cash basis accounting, no adjusting entries are made, therefore all entries originate from the cash receipt and payment journals.