RoBep Pty Ltd 

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Accounting Method

There are two Accounting method used. These are : 

  • Cash    
  • Accrual.      

Small businesses normally run on a cash basis with large corporation operating on an accrual basis. 

Cash Accounting

The Cash Accounting method – This is where the point of receiving and payment of income expense are recognized at the point where cash is transferred.

Accrual Accounting

Accrual Accounting Method- This is where the income and expense are recognized at point of sale, including credit transaction. Revenue is recorded at the inflow of good and service sold, expenses are recorded as of the outflow of cost for the expenses e g. purchase order being raised for the items.

In Accounting there are normally two ways to do most things.

  • the simple (basic) method    
  • the detailed accounting method   

Single entry Accounting 

Single Entry Accounting Method – is the uses of a column recording system for recording transaction. Each cash transaction is recorded in payment or receipt column which are added up at the end of the period to form an Income Statement (profit /loss). This method is used by small businesses that have a small amount of expense.

Double Entry Accounting 

Double Entry Accounting  Method -this is the use of an accounting package or T accounts so each time you record a transaction two accounts are involved. One is debit and the other is credited. In an accounting package this is done automatically when you entered. eg when money is used for the purchase of items the accounting package will debit the items and credit the bank account.

These terminology are use in all Accounting Methods.