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27th September 2017
The Accrual or Cash basis for Management Accounting? There are two basic methods for producing management accounts through the year – with accruals or just measuring the ‘cash’ through the bank. The accruals basis takes into account purchases and sales incurred by the end of the month that have not yet been paid. The cash basis is just that – simply what has passed through the bank account and nothing else. When accountants talk about "accruals and prepayments" they are referring to the monthly adjustment required to follow the accruals method. READ MORE