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Post Info TOPIC: The Difference Between Cash Accounting and Accruals


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The Difference Between Cash Accounting and Accruals


All I know is that a) cant use capital allowances with cash accounting, b) cash accounting is based on when money is paid and accruals is invoice based, c) not supposed to change from one to the other, d) small companies often better with cash as it helps cash flow yes? Is there anything else to it and how stringent is the no change policy? My client is asking me re whether they should consider changing (and if they are even allowed to) from accruals to cash. They are just starting out, turning over approx 2kpm, running at a loss overall and have a 44k loan but theres a lot of interest from clients and its in the environmental building industry which is burgeoning.



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You need to do some CPD/more reading.Companies cannot use cash accounting.

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Thank you. Good to know.

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