Why Cash Accounting is MISLEADING!! Accrual vs. Cash Accounting Explained

Рет қаралды 45,353

Күн бұрын

Cash Accounting is an over-simplified method of Accounting and often used by small businesses. The proper GAAP-accepted method is the Accrual Accounting. In this video we dive into an example business, examine its transactions, record the journal entries, and then see the IMPACT Cash Accounting has on the presentation of the Income Statement as proof it’s a misleading method of Accounting.
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Пікірлер: 76

@FeverByte 2 жыл бұрын

I am greatly impressed by your way of clearing concept theoretically and practically as well

@stevejones224 3 жыл бұрын

Love this channel. Only found it a few weeks back and learn more here than I ever did doing my AAT 👍

@TheFinancialController 3 жыл бұрын

Glad you enjoy it!

@victoriousjay97 2 жыл бұрын

This was so helpful and understandable!

@FatPizza56 2 жыл бұрын

Great video and very well explained!

@carmelmichee579 3 жыл бұрын

Thank you Bill, your videos are so useful and your explanations so clear.

@TheFinancialController 3 жыл бұрын

Glad you liked it!

@dailenimercedescontrerathe7007 Жыл бұрын

Thank you for the video; I learned much about those two accounting methods. Could you please let me know the differences between cash basis and modified cash basis accounting method?

@hackit9578 7 ай бұрын

Bill i finally bought your course. Im looking forward to unpacking it and learnig from it. Thanks for making accounting fun again. Thanks Kesh 🇬🇧

@TheFinancialController 7 ай бұрын

Awesome, thank you!

@chrisfenika7802 Жыл бұрын

Thank you for simplifying this for me.

@Lejeng-ck5sp 2 ай бұрын

very detailed and informative.. thank you so much.

@TheFinancialController 2 ай бұрын

Glad it was helpful!

@crwest2012 2 жыл бұрын

GREAT explanation and video. I learned something new today. Truly appreciate this video.

@TheFinancialController 2 жыл бұрын

Glad you enjoyed it!

@karenli33 3 жыл бұрын

This is great 👍! I learned a lot.

@TheFinancialController 3 жыл бұрын

Glad to hear it!

@jaimee842 3 ай бұрын

I have watched almost all of your videos. Good instructional video. Can you please make a video with multiple accrual entries and the reversal of them? Thanks.

@robinjames24 Жыл бұрын

Very well explained.

@Rocio-ft9qm 2 жыл бұрын

Thanks for the explanation

@dilyarachmatova3198 3 жыл бұрын

Amazing explanation

@education4949 3 жыл бұрын

Awesome, please post a video regarding significance and calculation of beneish m score . Can it be used by investors ?

@saddestdayever1276 2 жыл бұрын

As an accounting major, these are so helpful!

@TheFinancialController 2 жыл бұрын

Thanks brother

@nicoletolmie3201 3 жыл бұрын

Very helpful, thank you!

@TheFinancialController 3 жыл бұрын

Thanks Nicole!

@JordanJimenezGonzalez 6 ай бұрын

Very well explained, thank you very much sir.

@TheFinancialController 6 ай бұрын

You are most welcome

@e_nixma Жыл бұрын

Thank you so much for the video! Can a franchisee use a cash basis accounting method? Thank you.

@BGB17 3 жыл бұрын

Can you do a video on what to expect with a brand new Associates degree in accounting. I saw the one on bachelor's and it was awesome but I feel like Alot of people can't afford an bachelor's right away and are going AA first. With only my degree in hand and no experience should I just be aiming for clerk jobs? That seem to only pay about 17 ish an hour

@raidenx3x 3 жыл бұрын

This is awesome, thanks! would you also do a video where you Map GAAP to Balance sheet and cash flow?

@TheFinancialController 3 жыл бұрын

Thanks David sure

@evansjuma3831 3 жыл бұрын

Many thanks Bill, The video clearly expound of the differences between the two accounting methods. Glad to see that the cash accounting violates the ''matching principle''. Great work man! I would greatly appreciate if you can take us through the stock provision in the financial statements, the relevance of the same in the books, and provision methods that a manufacturing firm and retail business can adopt. Many thanks brother!

@TheFinancialController 3 жыл бұрын

Thanks Evans!! Sure.

@reds.8995 3 жыл бұрын

I had two accounting interview, they asked this question.

@TheFinancialController 3 жыл бұрын

Nice! I hope you answered correctly:)

@mauricioalejandro74 3 жыл бұрын

For what position if you mind me asking?

@goharayub3558 2 жыл бұрын

How about casinos? Do they use cash accounting or accural accounting. If there are working online? Just curious to know. I am a fresh graduate in accounting and finance. You are videos are really helping as i am looking for my first ever job too

@YourDailyDoseOfMeditation 6 ай бұрын

*** How do you recorded the income for 2021 when it is received since we already recorded it in 2020??

@mohamadbagir1239 2 жыл бұрын

I have a question, how reliable I use accrued method in accounting system Which is the transaction at the same time for example at 20 Sept I sell the watch product and the same also get the cash from it, what's the journal from you with accrued method? a). Cash (Dr) receivable (Cr) B). AR (Dr) Sales (Cr) and the same also cash (Dr) AR (Cr)

@ginanutt980 6 ай бұрын

So what if you mistaken your original tax return and now t years later realized we marked wrong box ddo we need to file ann amendment. Its the revenue that is affected😊

@MS-zp7bt Жыл бұрын

Can you use both methods?

@ansatsu34 3 жыл бұрын

Hey Bill I am Senior accountant at a retail company for 4 years (did 2 in governmental auditing before, left after getting CPA). I do GL accounting, so everything besides AP/AR, FA and inventory. I want to find a new job, senior or manager (any industry) but am nervous about my experience (or rather lack of). Do you have any advice? Currently going through all your videos. Thanks

@reds.8995 3 жыл бұрын

Wish you are lucky 🍀 to find your new dream job!

@Kingiscoming Жыл бұрын

THANK YOU!

@TheFinancialController Жыл бұрын

You're welcome!

@Cricelia 2 жыл бұрын

gracias

@drstriver1 7 ай бұрын

Sir can you pls tell me treatment of income received in adavnce on cash basis Like rent income year ending dec 2020 is $10000 but amount received as rent income in dec 2020 is $20000

@Drew-fo6jk 3 жыл бұрын

I’m having trouble with converting from cash basis to accrual accounting. Do you have any videos on this subject?

@TheFinancialController 3 жыл бұрын

Will do in the near future

@Drew-fo6jk 3 жыл бұрын

@@TheFinancialController thank you! I subscribed to your channel

@monicajones9597 Жыл бұрын

Would you consider asking a small company during the interview which method they used as intrusive?

@TheFinancialController Жыл бұрын

such a good question....It's a risky one, but I like it. It shows insight and that you are keen to learn about the company.

@monicajones9597 Жыл бұрын

@@TheFinancialController Yes, I agree it sounded risky. I'll ask on an interview that already is going downhill so it won't matter because I've already determined that I don't want to work for them. 🤣😂

@d0rk 3 жыл бұрын

Please teach me how to use GAAP with Cash Basis accounting

@TheFinancialController 3 жыл бұрын

Ok will do

@GetMyCare 3 ай бұрын

But if the customer did not pay their Invoice of 10k the tax report will show as it was paid but the bank statement will be -15k!

@tomovujovic625 5 ай бұрын

In cash accounting you have to record a/r in 2020 and contra account in liabilities calculated but not collected revenue like first step in this example. For revenue and expense example is correct but for asset and liabilities cash recording in this example is not correct. A/Receivable and A/Payable in cash accounting have to be reccord when claim or obligation arise, revenue and expense when cash come to or go from bank account.

@shaileshmodi5433 3 жыл бұрын

💍 Gem Channel, Can you please make a video on Record to Report Complete Activity - Including Closing Entries for Accrual/Deferred/Provision? also for fpna

@TheFinancialController 3 жыл бұрын

Thanks Shailesh! will do.

@TimTheMusicMan 2 жыл бұрын

Why is Roger CPA review better than Becker ?

@TheFinancialController 2 жыл бұрын

Roger style is way more engaging, which is important because the material is boring

@AdamGtr86 5 ай бұрын

Actually accrual was not a close representation. Why the government mandates that is mentally ill. You are paying tax on $5,000 you didn't bring in as cash. And if in January that deal falls apart and you have 0 income in January, you have to wait until your tax return in 12 months to claim the loss and get your taxes back. As a small business you could have $1,000+ dollars in overpaid taxes for over a year, for income that will never be received.

@Potencyfunction 5 ай бұрын

I am in doubt about some things. It is clear who knows what and why _to calculate cash vs how to read the principles of accounting. Is not embrassing to be stupid and show it ?

@tugbaonder9957 3 жыл бұрын

Hello from Turkey. Your videos very helpful. But I wish you speak slower for not being native English speakers 😟

@TheFinancialController 3 жыл бұрын

Ok will do

@oscar29846 3 жыл бұрын

There is a playback option on KZfaq that lets you slow down the speed of which the video is being played. (i.e .75x)

@TheFinancialController 3 жыл бұрын

Thanks Oscar for pointing this out

@oscar29846 3 жыл бұрын

@@TheFinancialController thank you for posting quality accounting content sir! I hope to be as knowledgeable as you some day in my accounting journey. Currently I am close to my senior year of accounting in college and these videos help more than you could ever know to fully immerse myself in this material! Thank you so much again as I’m sure that this is helping me get to that extra step, that is, getting my CPA certification in a few years time!

@TheFinancialController 3 жыл бұрын

Good work, keep learning and it will pay off!!

@joebazooks 2 жыл бұрын

accrual only ever makes sense if youre offering or purchasing goods or services on credit and fuck credit :]

@dilyarachmatova3198 3 жыл бұрын

Do you have Instagram?

@benderbendingrofriguez3300 2 жыл бұрын

so in a few words only mobsters, and any criminal use the Cash Accounting.

@thanle6628 7 ай бұрын

Talk so fast, not for people know not thing!

@scottxflips 5 ай бұрын

Use the playback speed adjustment to lower the video speed if necessary and watch multiple times through to study. With complex topics I generally use standard speed or sometimes slower if they're a fast talker and there are lots of details. For general informational, entertainment, edutainment etc usually 1.5 to 2x is great depending on if they speak quickly or not.