Читать книгу Entrepreneurial Finance - Robert D. Hisrich - Страница 40

Two main methods used in accounting are the cash accounting method and accrual accounting method. The cash accounting method records revenues when received and expenses when paid. The results can be difficult to understand and get a clear picture of the company as expenses may be registered several months before or after the associated revenue is made (see Table 3.4). Because of this poor matchup between revenue and expenses, this method is not good for larger, more complex firms with large inventories, but it is perfectly appropriate for small businesses with limited or no inventory.

Table 3.3

Table 3.4

The accrual accounting method registers revenues billed but not necessarily when the actual cash is received; similarly, this method registers expenses as incurred (accrued) but not necessarily as they are paid. The advantage of this method is that it provides a clear picture of a venture with respect to relating costs and revenues. On the other hand, this method does not give a precise picture of how the company is doing in terms of liquidity. To be more specific, it does not show whether the venture is about to run out of cash.