Cash and Accrual Basis of Accounting

&NewLine;<&excl;-- WP QUADS Content Ad Plugin v&period; 2&period;0&period;95 -->&NewLine;<div class&equals;"quads-location quads-ad1" id&equals;"quads-ad1" style&equals;"float&colon;left&semi;margin&colon;0px 0px 0px 0&semi;">&NewLine;&NewLine;<&sol;div>&NewLine;<h3>Accrual Basis of Accounting<&sol;h3>&NewLine;<p> Accrual based accounting works on the concept that income will be booked as it is earned expenditures related to specific period will be recorded as they become due&period; <&sol;p>&NewLine;<p> For example&comma; if in a month sales are worth of Rs&period;7&comma;000 but actual receipts are &dollar;5&comma;000&comma; following entry will be made&colon; <&sol;p>&NewLine;<blockquote><p> <strong>Cash &sol; Bank&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi; 5&comma;000<br &sol;>&NewLine;Accounts Receivables&&num;160&semi;&&num;160&semi;&&num;160&semi; 2&comma;000<br &sol;>&NewLine;Sales income&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi; 7&comma;000<&sol;strong> <&sol;p>&NewLine;<&sol;blockquote>&NewLine;<p> Total expenses in the month were &dollar;&period;4&comma;000 but only &dollar;3&comma;000 have been paid in the form of cash&period; Following entry will be made <&sol;p>&NewLine;<blockquote><p> <strong>Expenses&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi; 4&comma;000<br &sol;>&NewLine;Cash &sol; Bank&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi; 3&comma;000<br &sol;>&NewLine;Expenses payable&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi;&&num;160&semi; 1&comma;000<&sol;strong> <&sol;p>&NewLine;<&sol;blockquote>&NewLine;<p> Cash basis of accounting is used in smaller organizations where no compulsions of regulations prevail but accrual based accounting is internationally accepted by investors and regulators&comma; therefore&comma; required to be adopted by large organizations&period;&NewLine;<&excl;-- WP QUADS Content Ad Plugin v&period; 2&period;0&period;95 -->&NewLine;<div class&equals;"quads-location quads-ad2" id&equals;"quads-ad2" style&equals;"float&colon;none&semi;margin&colon;0px 0 0px 0&semi;text-align&colon;center&semi;">&NewLine;&NewLine;<&sol;div>&NewLine;&NewLine;<&excl;-- WP QUADS Content Ad Plugin v&period; 2&period;0&period;95 -->&NewLine;<div class&equals;"quads-location quads-ad3" id&equals;"quads-ad3" style&equals;"float&colon;none&semi;margin&colon;0px&semi;">&NewLine;&NewLine;<&sol;div>&NewLine;&NewLine;