Accountant Case

As an accountant you have learned and developed many important skills throughout your career. Just about everything including statements is related to one another in some way. How and when things are record is a very important factor in accounting. Our team will be discussing what we think are the most important skills as well as explain differentiating between accrual basis and cash basis. What an adjusting entry is along with viewing an example of an adjusted trial balance.

In accrual basis accounting revenue is recognized when it is earned, not necessarily when it is paid. Expenses are also recognized when they are incurred, not necessarily when they are paid. This method uses what is known as the matching principle (matching expenses to revenues) when they are received rather than when they are paid.

Cash basis accounting on the other hand recognizes revenue and expenses when they are paid, not necessarily when earned or bills received. Since there is no matching principle involved and entries are only made when cash changes hand, cash basis accounting is a less accurate account method.

Whether using cash or accrual basis accounting it is important to understand that the basis of accounting principles must be factual and all inclusive; because of this adjusted entries must be included in a trial balance. By creating an accurate adjusted trial balance after adjustments are made provide data that is required in other statements that are used by accountants and businesses for the closing of fiscal periods and making business decisions.