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Class-XI


               Accountancy

               Topic – Bases of Accounting







               Bases of Accounting
               There are two bases of ascertaining profit or loss, namely:


               (1) Cash Basis

               (2) Accrual Basis.



               CASH BASIS



               Cash basis accounting is an accounting method in which record of the
               revenues are on its actual receipt and of the payments on its actual

               payment. It records only cash transaction ( non cash transactions are
               ignored ).

               ADVANTAGES OF CASH BASIS ACCOUNTING



                     Since it is simple and requires recording less no. of transaction compared to
                       accrual system, it is less time-consuming.

                     This system does not require expert accounting knowledge. It is just based
                       on the actual receipt and actual payment of cash.


                     Suitable for those organizations where most of the transaction are on cash
                       basis
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