Basis of accounting

Advantages & limitation of Accouning

1. Basis of Accounting Dr. Pushpa Suryavanshi

2. Accounting Cycle

3. System of Accounting Single Entry System Double Entry System Cash System Indian System Accrual System

4. System of Accounting Single Entry System- Single-entry  accounting  is a form of bookkeeping and  accounting  in which each financial transaction is a  single entry  in a journal or transaction log. Double Entry System- Under a system of book keeping where every  entry  to an account requires a corresponding and opposite  entry  to a different account. The  double - entry  has two equal and corresponding sides known as debit and credit. 

5. System of Accounting Cash System - cash accounting basis , revenue  is  recognized only when  cash is  received from the customer while expenses are recorded when  cash is  paid. Indian System- Under this System raw & final cash book or subsidiary books are kept. Accrual System - The   accrual accounting is  used to record revenue and expenses  in the  period in which they are earned or incurred irrespective  of  the  cash  flow.

6. Basis of Accounting A  basis of accounting  is the time various financial transactions are recorded. The cash  basis   and the accrual  basis  are the two primary methods of tracking income and expenses in  accounting.

7. Difference Between Cash & Accrual Basis Cash Basis Accrual Basis The accounting method in which the income or expense is recognized only when there is actual inflow or outflow of cash. The accounting method in which the income or expense is recognized on mercantile basis. Simple Nature Complex Nature Only Cash Expenses are recorded Both Cash and Non- Cash Expenses are recorded

8. Difference Between Cash & Accrual Basis Cash Basis Accrual Basis This method record s only cash transactions. This Method records both cash and credit transactions. Under this income are recorded which have been received in cash. Under this all income are recorded whether cash is received for them or not. This method not recognized by Indian Company Act 1956. This method recognized by Indian Company Act 1956.

9. Difference Between Cash & Accrual Basis Cash Basis Accrual Basis This method does not make difference between capital & revenue items. This method make difference between capital & revenue items. This method suitable for non-profit organization. This method suitable for profit organization. Degree of Accuracy is low. Degree of Comparatively high.