Accrual_method
Basis of accounting
The time when financial transactions are reported
A basis of accounting is the time various financial transactions are recorded. The cash basis (EU VAT vocabulary cash accounting) and the accrual basis are the two primary methods of tracking income and expenses in accounting.
The examples and perspective in this article deal primarily with the United States and do not represent a worldwide view of the subject. (February 2011) |
Both can be used in a range of situations, from the accounts of a whole country[1] or a large corporation to those of a small business or an individual. In many cases, regulatory bodies require individuals, businesses or corporations to use one method or the other. When this is not the case, the choice of which to use is an important decision, as both methods have advantages and disadvantages.[2][3]