Financial Accounting
- Submitted by: travina1
- Views: 282
- Category: Other
- Date Submitted: 02/17/2014 07:02 PM
- Pages: 2
- Report this Essay
Financial Accounting
Commercial accounting is a manifestation of all business transactions. This kind of accounting can only be acquired if cash and credit transaction are apperceive and documented in a way that can't be copied or repeated. The system that makes this possible is a commercial accounting system or also known as a double entry book keeping and the system record both perspectives. Commercial accounting records transactions on the date in which the transaction was made, regardless of if it was actually paid or not.
GAAP provide organizations and accountants with a consistent set of rules and guidelines that consist of broad accounting principles and specific principles. These principles are used to help organizations or accountants record and display the results of the records of all liabilities.
Cash basis accounting is a method used in which whenever a traditional payment is made, they are recorded only at the time they occur. Revenue is documented when cash is received and expense is documented when cash is paid out. Businesses using this method do not have inventory goods services are purchased with cash to sell and document at that time. There is no expectations of receiving money for those goods or services on down the line, cash has to be up front at the time of making a purchase. The cash basis principal does not meet the requirement of generally accepted accounting principles.
Accrual basis accounting is a method where revenue is recognized when it is earned and expenses when they incur even if money have not been received or if expenses have incurred but not paid out. This method is generally used within business and accountants, because it displays the company's profit during an accounting period. Accrual basis provides a clear and concise idea of where a company’s financial position is at a point in time, because it records all assets they have earned and all liabilities they owe. This method was developed...
Commercial accounting is a manifestation of all business transactions. This kind of accounting can only be acquired if cash and credit transaction are apperceive and documented in a way that can't be copied or repeated. The system that makes this possible is a commercial accounting system or also known as a double entry book keeping and the system record both perspectives. Commercial accounting records transactions on the date in which the transaction was made, regardless of if it was actually paid or not.
GAAP provide organizations and accountants with a consistent set of rules and guidelines that consist of broad accounting principles and specific principles. These principles are used to help organizations or accountants record and display the results of the records of all liabilities.
Cash basis accounting is a method used in which whenever a traditional payment is made, they are recorded only at the time they occur. Revenue is documented when cash is received and expense is documented when cash is paid out. Businesses using this method do not have inventory goods services are purchased with cash to sell and document at that time. There is no expectations of receiving money for those goods or services on down the line, cash has to be up front at the time of making a purchase. The cash basis principal does not meet the requirement of generally accepted accounting principles.
Accrual basis accounting is a method where revenue is recognized when it is earned and expenses when they incur even if money have not been received or if expenses have incurred but not paid out. This method is generally used within business and accountants, because it displays the company's profit during an accounting period. Accrual basis provides a clear and concise idea of where a company’s financial position is at a point in time, because it records all assets they have earned and all liabilities they owe. This method was developed...