Cash Accounting
- Thread starter Beef11
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rockridgecattle
Well-known member
Cash accounting....everything paid and earned in cash no charges (accounts payable)are included no or accounts recievable are included when doing statements
accural accounting includes all charges in purchased and charges to customers that have yet to be paid or recieved...accounts payable and accounts recievable
accural accounting includes all charges in purchased and charges to customers that have yet to be paid or recieved...accounts payable and accounts recievable
rockridgecattle
Well-known member
not an accountant, just a book keeper for my records. We have an accountant which i would recommend to any farmer. Tax laws are complex so...pay the bucks and get a good accountant. If you do the bookwork it will save $ but the tax accountant can save you on filing
Cash VS accural, depends on the situation. If you have alot in accural then it might benifit you income/expense wise and in generating reports when you have to go to the banker.
If you sell alot on credit accrual reports show that.
But could be more painful farm programs...for example CAIS for canadian....more paper work can be painful....to the tune...ouch my head hurts painful.
Cash is more simple...money in money out.
Your accountant is your best sourse of advice. Kind of like a good vet should be the source for good cattle...livetock...advice
Cash VS accural, depends on the situation. If you have alot in accural then it might benifit you income/expense wise and in generating reports when you have to go to the banker.
If you sell alot on credit accrual reports show that.
But could be more painful farm programs...for example CAIS for canadian....more paper work can be painful....to the tune...ouch my head hurts painful.
Cash is more simple...money in money out.
Your accountant is your best sourse of advice. Kind of like a good vet should be the source for good cattle...livetock...advice
Running Arrow Bill
Well-known member
I'm not an accountant, even though I've had college accounting courses. At RAF we use a CPA firm for our business. This trivia aside, some definitions:
CASH accounting DOES NOT mean buying and selling with "cash" money. It means using any legal tender to buy, sell an item. Expenses are incurred when the bill is paid. Income is earned when customer's legal tender is received.
ACCRUAL accounting much more involved. Involves accounts receivable and payable as well as inventory management. Expense is incurred the date of vendor's invoice. Sale is incurred the date of the sellers invoice. Inventories of stuff must be taken and carried forward from year to year.
Accural accounting involves more paperwork for sure.
Your accountant can advise one on which method is best for one's particular business venture.
CASH accounting DOES NOT mean buying and selling with "cash" money. It means using any legal tender to buy, sell an item. Expenses are incurred when the bill is paid. Income is earned when customer's legal tender is received.
ACCRUAL accounting much more involved. Involves accounts receivable and payable as well as inventory management. Expense is incurred the date of vendor's invoice. Sale is incurred the date of the sellers invoice. Inventories of stuff must be taken and carried forward from year to year.
Accural accounting involves more paperwork for sure.
Your accountant can advise one on which method is best for one's particular business venture.
Susie David
Well-known member
Have to agree that a good account/tax man is invaluable.
Basically the cash method of accounting is the easiest for a small operation without a accounting department to handle al the book work. The transactions are entered into the books when the money is received or paid out not when the deal is made.
The accrural method enters transactions when the deal is made whether the money is in hand or not...accounts receivable & accounts payable. Alot more book work.
DMc
Basically the cash method of accounting is the easiest for a small operation without a accounting department to handle al the book work. The transactions are entered into the books when the money is received or paid out not when the deal is made.
The accrural method enters transactions when the deal is made whether the money is in hand or not...accounts receivable & accounts payable. Alot more book work.
DMc
TexasBred
Well-known member
I'm certainly not a CPA but something sticks in my mind that in the past only corporations and certain other entities can use accrual accounting. This certainly could have changed by now. However, accrual accounting does require a much better understanding of accounting as you have all the things mentioned above as well as deferred items, prepaid items which must be carried out over the term of the item. ie 12 month insurane policy you set it up as a prepaid item whn you write the check then recognize 1/12 of the expense each month. Many more journal entries as opposed to simple receipts and disbursements.
Beef11
Well-known member
I'm a big fan of Managerial accounting for my own records. Cash accounting seems that it would have benefits from a tax standpoint but i can be very vague as far as giving credit where credit is due. Fun stuff
