Cash or Accrual? What’s the Difference?
Nov 09, 2020 by Roger Scherping in income statement, cash basis, accrual basis
I often talk with my clients about their financial statements, and I’ve learned that most people think about profit and loss in terms of cash. They say things like, “We had a great month because we got paid $50,000 from our best client,” or, “This was a bad month because we had to pay lots of bills.” In other words, they think that their income statement should reflect when they get paid and when they pay their bills. That’s what we call the cash basis: Nothing happens until cash changes hands. That m... [continue reading]
