Cash and Accrual Accounting

Cash and Accrual Accounting

• The accrual system focuses on when a transaction takes place.
• In contrast, the statement of cash flows is concerned with cash receipts and payments, and not the timing of the underlying transaction.
• There can be a significant difference between an entity’s cash position and its profit.

Difference Between Cash and Accrual Accounting

Statement of Profit or Loss

Statement of Cash Flows

The Statement of Cash flows

Reports:

• cash balance at beginning and end of period
• cash inflows and outflows for the period
• net cash for the reporting period.