Cash basis: know what it is and how it differs

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From the accrual basis by marketing para indústria february 24, 2020 sales cash basis is an accounting tool that serves to measure the amount of money your company has. Knowing how to manage it is important so that all bills are paid on time! No time to read? Download the free pdf now if you are a new entrepreneur, you have certainly come across the terms cash basis x accrual basis . These two methods ensure that your company has impeccable results when recording incoming and outgoing cash flow numbers. To better understand what we are talking about, we decided to write this article to show the difference between the two, highlighting which companies can opt for them. Check out! Read now! Understand what cash basis is also check the accrual basis know the importance of cash flow learn which companies can opt for accrual and cash basis systems do you understand the difference between the two? So be friends with accounting! Understand what cash basis is first of all.

Let's explain what this term represents! Basically, this structure serves to record all documents – such as income and expenses – that enter your company's cash flow. It is worth noting that this accounting regime is only recorded after purchases are made. Therefore, managers will only have to consider those amounts that were received, disregarding those recorded Bank User Number Data during the issuance of the invoice. There is a lot of confusion when talking about cash and accrual basis, and we will solve these problems soon here. However, before that see the concept of accrual accounting. Also check the accrual basis the accrual basis is the opposite of what was mentioned previously! This is because the documents are registered on the date on which the payment or service was provided. In other words, it doesn't matter when a particular event will be paid for or received, as long as the registration is done by your company. Normally, the accrual basis is used one month after the determined date and the fact that generated the expenses and income occurred.



In other words, on the date on which the purchase or provision of the service was made. The accrual system has two divisions, which are easy to understand: revenue recording: normally, this type of recording is made according to the period of transactions carried out with other companies and customers, even if payment was made on the stipulated date or later. In this case, revenue is recognized on the day the contract was signed; record of fixed and variable expenses: fixed expenses symbolize those bills that you will have to pay, regardless of whether there is revenue or not in your company, while variable expenses are those that arise depending on the production of a product or service. These expenses are recorded from the moment the active values ​​cease to exist. Having a clear division of the accrual regime makes it easier to apply it to your business.