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Checkpoint: Accrual Method

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Checkpoint: Accrual Method

These two are very different methods, but when speaking of the accrual method of accounting and the cash basis of accounting, the one main way to differentiate between the two are how they are recorded. The transactions are recorded in different ways. The accrual method likes to record the transaction before the actual transaction has given the money. So with the money not present in hand it’s still recorded. On the other hand we have cash basis accounting where the organization records in their books when the transaction has been given the money in hand or when it leaves their system. Now, depending of course on the different organizations you are discussing or dealing with on which is more adequate for their needs, but o accrual accounting I would predict that it would be more adequate to a nonprofit organization.
The statement of cash flow is of great importance to an organizations financial management. When cash comes and goes this statement is present to give an adequate breakdown of what is recorded and given. The totals are added up over a particular time period. So the term cash flow is the main term used to make all clear. When financial stability of an organizations rest on what money they make or spend every day. It’s just fact money is an issue; you have to have it in personal venue and organizational venue as well. It will always be a topic of interest. These are two large accounting methods that are both used.

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