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Cash versus Accrual Accounting

Provided by Khan Academy


The cash basis and the accrual basis are the two primary methods of tracking income and expenses in accounting. This tutorial compares cash accounting, which recognizes transaction only when there is an exchange of cash, and accrual accounting, that records income when it is earned and deductions when expenses are incurred, regardless of when cash transactions occur.

The first part of the tutorial provides an example of cash accounting. 

In the second video you will explore the basics of accrual accounting. 

 

Now we will compare accrual and cash accounting. 

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