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Sagot :
That statement is: Revenue is recorded only when cash is received, and expenses are recorded only when cash is paid.
Cash and accrual accounting contrast in a number of ways, yet the principal distinction is when income and expenses are really reflected in a business' books. Organizations that are qualified to utilize cash accounting quite often really like to utilize that technique since it's less complex and more direct.
Since income and expenses are recorded at various times in the event that a business is utilizing cash or accrual accounting, this likewise influences when organizations cause tax liability (or advantage) because of these exchanges.
For instance, while organizations utilizing cash accounting cause tax liability when assets from a deal hit their record, organizations utilizing accrual accounting are taxed on deals made in a given year, whether those deals have been paid for.
to know more about tax liability click here:
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