What is the difference between cash and mercantile system
of accounting? Which according to you is a better system &
why?
- 2 Answers
- 22198 Views
- I also Faced
- E-Mail Answers
Answer Posted / saurabh goel
#
Cash Basis Accounting
Under cash basis accounting revenues are recognized and
earned only when cash is received irrespective of when and
how the services were performed or goods delivered.
To put it in different terms, the cash basis of accounting
asks you to take into consideration all those incomes/gains
that have been received in cash or other assets and
expenses/losses that have been paid out in cash or other
assets during the accounting period in consideration.
#
Accrual or Mercantile Basis Accounting
Under accrual or mercantile basis accounting, revenues are
recognized and earned when they are realized or realizable
irrespective of when the cash is received.
To put it in different terms, the accrual basis of
accounting asks you to take into consideration all those
incomes/gains and expenses/losses pertaining to the
accounting period for which you are trying to ascertain the
profits and losses irrespective of whether the incomes are
received in cash or not and the expenses are paid out in
cash or not.
| Is This Answer Correct ? | 43 Yes | 5 No |
Post New Answer View All Answers
am attend to bank exam(iob)pls send model questions
my boss (Managing Partner of a firm) promoted along with his wife a private limited company. he and she spent some Rs. 75,000/- (approx) for the promotion of the company. i know that they usually fall under the head of preliminary expenses. but after receiving the certification of incorporation of the company how shall i repay them to the promoters i.e. what is the accounting entry in the books (initial books of accounts) for the expenditure incurred. they have kept in hand 5,00,000/- each to meet the expenses and they were allotted shares of equal to the amount. can i allot shares for a consideration of cash from and excluding the preliminary expenses. can i take cash towards the share application money (being the cash more than Rs. 20,000/-) as the company has not opened a bank account yet. please give me the detailed answer with journal entries that can be entered in tally. thank you.
WHAT IS THE DIFFERENCE BETWEEN SEND FOR APPROVAL (WITHOUT PARKING) AND ASSIGNMENT CORRECT IN MYSAP FI POSTING?
While we are bringing our machinery items to factory through a vehicle from other state to Andhra pradesh, is this correct to send our own state way bill along with the other state way bill.
What are the accounting conventions and Practices?
how we could adj. the entries of prop. & firm in merging time
What does my credit score mean?
in what form is crr kept in RBI?
Expand-------ATBN
My balance sheet is tallied. But there is a difference of RO 1 in cash flow. How to adjust ?
deffered tax treatment in financial statements
can we get all interview questions with answers in tally 9 which mostly asked in MNC's.
DIFFERENCE BETWEEN THE DEPRICIATION AND IMPOSEMENT? DIFFERENCE BETWEEN THE CAPITAL LEASE AND FINANCE LEASE?
what is investment banking
let me know the minimum Accounting Heads in an accounting system
