Bookkeeping services for small businesses is a crucial concept of accounting that enables a chief aspect of management.
Accounting is the art of classifying, summarizing, and presenting events and transactions in the most simplified and eventful manner.
Bookkeeping is the practice of keeping a regular record of financial transactions happening in the business. Trades are happening every day inside a firm’s functional premises, and bookkeeping is the practice of tracking every bit of it to ensure accuracy in results.
It would not be wrong to say that accuracy is hard to maintain without bookkeeping, and tracing the company’s financial position also becomes a challenge.
External factors like investing or investment presentation, lending decisions and others are also affected by Bookkeeping accounting.
Overall, bookkeeping is crucial in accounting in any sound business environment working on a small to medium scale.
Difference between Accrual and Cash Basis of Accounting
There exist two types of business bookkeeping services in accounting, and the company has the choice of selecting the apt one for itself. The two accounting methods: The accrual basis of accounting; Cash basis of accounting. Let’s see each one individually:
Cash Basis of Accounting
Under this method, the transaction is recorded when the real cash is received. So, if a transaction is happening without cash inflow, it would not be mentioned in the accounting books that work on a cash basis. For example: If you sold a certain amount of goods on credit, there is a financial event taking place, but you would still not record it in the accounting book that functions on a cash basis.
Accrual Basis of Accounting
Contrary to the one mentioned above, the books of accrual basis of accounting records every financial event, no matter whether real cash is received or not. So, if you buy a certain item for your office on credit, it would be liable under accounts payable in your accrual basis of the accounting book.
Which method of accounting is better?
Both the ways mentioned above have their own significance. While cash basis helps ascertain the exact amount of real money, accrual basis helps in tracing every bit of information.
It is also dependent on your daily business transactions if you are making more cash or credit transactions.
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