Accounting : Cash And Accrual Accounting

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Cash and Accrual Accounting

Organizations have two types of accounting that is processed: cash and accrual. Accountant’s use both of these to track the income and expenses within the organization. The main difference between these two is the timing in how payments are received. Cash accounting is not documented until payment has officially been received. For example, cash in hand for a service or when a check has cleared can this be accounted as cash accrual. On the contrary, accrual accounting is accounted for when the actual sale occurs. In this case, this can be seen in a hospital setting where the organization knows it will be reimbursed in time by an insurance company, so it is immediately recorded as income received. Accrual …show more content…

Yes however they had more liabilities in the 2014 year; it counteracted the net asset variance of 432,202. So which the company had to spend 48,291 to profit the 432,202 that was made in 2014. The operating statement is used to asses’ performance and financial stability. It records the organization’s revenues and how it pays expenses, debts, and taxes. It is the statement that provides net profit/income for the company. The Stanford document presents the beginning and ending year of revenue and in-between it shows us the expense paid out. In 2014 the total expense were more than 2013, however the company made more in operational revenue which turned a profit.
The cash flow statement is very similar to an everyday checkbook. This represents money in and money out. This shows deposits and liabilities in streamline of investments made, accounts payables, and equities that transpired over the year. The year 2014 after had a more profitable year than 2013.
Asset Valuation Asset valuation consists of six ways to determine if something is an asset. Of those six is price level adjusted historical cost, net realizable value, future profits, and replacement cost. Price level adjusted historical cost is described using inflation. In general overtime, assets can usually increase in value with inflation. The advantage of using is that it can inflation for assets can look

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