XACC 280 Week 3 DQ 2

Question:
What is the difference between the cash basis f accounting and the accrual basis of accounting? Which one would you select for a company that has inventory and why? Does the size of the company make a difference? Explain how. What would be the advantages and disadvantages of using one basis of accounting over the other?
Response 1
A small organization will most likely use cash basis for accounting. This allows them to record expenses and revenue when a actual transaction occur. It is also easy for small company’s to understand without the complexity of understanding accrual accounting methods.
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