One of the main differences between the cash and accrual methods of accounting is when revenue and expenses are reported. In a cash method, revenue is recognized when money is actually received and an expense is posted on the date it is paid. This method is used often by service businesses because they do not typically carry substantial inventory. There are some businesses that cannot use a cash method. Some examples are:

* A corporation (other than S) with revenue exceeding $5 million

* A business that carries inventoryRead More >>