By Leanna Kelly Most businesses handle their accounting on an accrual basis. What is accrual basis accounting? It’s the practice of recording transactions at the point of origination, even if no money changes hands at that time. This is in contrast to cash accounting, which sees transactions recorded only when funds change hands. Accrual can seem confusing at first, but it makes much more sense the more complex a business becomes and the more transactions it deals with.
Accrual basis accounting relies heavily on the matching principle—and as a result, makes it easier to better-understand transactions as they happen. This method represents the …read more
