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 It is not simple as cash basis

 This system require expert accounting knowledge.

 Suitable for all organizations

 It is time consuming .

Difference between Accrual basis and Cash basis

Basis Accrual basis Cash basis

In accrual accounting, incomes and
both cash and credit expenses are recognized when
Basis Only cash transaction
transaction they are done (on the mercantile
basis).
Recording Recorded when transaction Recorded when actual payment is
of become due made/received All expenses and all incomes.
transaction
For not for profit business Complex and difficult to
Suitable For business organisations
organisations. understand.
Legal recognized by Companies Not recognized by Companies
Recognized by Companies Act.
position Act.2013 Act.2013
Correct
When revenue is earned or loss is
profir or Correct profit/loss is valued incorrect profit/loss is valued
incurred.
loss

Expert Expert knowledge required Expert knowledge required Revenue/Expense/Profit/Loss.
knowledge
We can understand how much
Adjustment required adjustment no adjustment required profit or loss a business has made
during a particular period.
Capital and Capital and revenue items are
Capital and revenue items are Yes, because it includes all of the
revenue not treated in the same
treated in the same manner transactions.
items manner