A cash system of accounting is a system of accounting in
which all transactions are recorded only when actual cash
is received or paid. On the other hand in Mercantile system
of accounting the transactions are recorded on due basis
ie. when a transaction arises.
Eg. when sale is made on credit, in cash system of
accounting no transactions will be recorded however under
mercantile system of accounting the transactions will be
in cash system of accounting expense are considered expense
only when they are received same apply to income also. this
considered to be defective as this doesn't represent true
picture pf profitabilty.
in mercantile expenses are considered as expense durind
the period to which they pertain.when the expense are
received is not significant smae apply to income also.
Accrual: Accounts on a balance sheet that represent
liabilities and non-cash-based assets used in accrual-based
accounting. These accounts include, among many others,
accounts payable, accounts receivable, goodwill, future tax
liability and future interest expense.
accrual accounting system is mostly used by large
businesses or organizations. under this method all the
transaction are recorded whether it is cash transaction or
credit transaction. for example under the accrual method
revenue is recognized when customer are invoiced,
regardless of when payment is recieved. similarly, an
expense is recognized when the bill is recieved, not when
payment is made.
I AM WORKING IN THE CORPORATE (HEAD OFFICE)OF A FINANCE
COMPANY. I CO-ORDINATE FOURTEEN BRANCHES IN DELHI. AND MY
JOB PROFILES ARE BANK RECONCILIATION,CASH RECONCILIATION,
MIS,TRAINING TO THE JR.EXECUTIVES,BRANCH VISIT,SUPPORTING
TO BRANCH,ETC. THE QUESTION WAS WHAT U DO FOR UR BRANCH? I
TOLD MY ALL JOB PROFILE BUT IT WAS NOT A GOOD ANSWER. WHAT
TO SAY FOR THE NEXT TIME?
A check deposited in a saving account is shown as
credited in clear balance in the passbook while the other
check deposited next day is shown as pending clearance.
Can a bank later on debit the amount of the 1st check
unilaterally,once it is cleared by bank.