Cash vs Accrual Basis Accounting | EXPLAINED

Learn the differences between accrual basis accounting and cash basis accounting, essential for small businesses. Cash basis accounting records transactions when cash is exchanged, while accrual basis accounting recognizes revenue and expenses when earned or incurred, regardless of cash flow. Discover how each method impacts revenue recognition and expense tracking, and choose the right approach for your business's financial reporting. From CRA requirements to the matching principle of accounting, this video provides clear examples and insights. Make informed accounting decisions and stay compliant with this informative content. Subscribe for more on accounting content.

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CRA RESOURCES

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TIMESTAMPS:
00:00 Intro
00:28 Cash Basis Accounting
01:04 Accrual Basis Accounting
01:49 CRA Requirements
02:07 Examples of Expenses & Accruals
03:39 Matching Principle
04:09 Matching Principle - Inventory & COGS
05:48 Additional Considerations
06:32 Outro

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FREE RESOURCES

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ABOUT ME
Hi, my name is Irene! During my time working in public practice, I realized that so many small businesses had so much untapped potential because they were missing a vital component in their business: Company Finances. Many business owners were never taught financial literacy and I realized that there was a need for accounting services with a modern-day approach that supported business owners. That is how Sense Accounting CPA was born. We are a cloud-based firm that provides bookkeeping and fractional CFO services for Canadian small businesses. The goal for this channel is to share important accounting and tax information for Canadians.

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Social Media Handles are all @SenseAccountingByIrene

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Disclaimer – The information presented in this video is for entertainment purposes only. Although I am a Chartered Professional Accountant, I am not your accountant and therefore, the information should not be taken as financial or legal advice. Every individual's situation is unique, and it is important to consult with a qualified financial or legal professional before making any decisions related to your personal finances or legal matters.