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Theory Base of Accounting — Account STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceAccountTheory Base of Accounting3 Marks
Question
Write down any three differences between Cash Basis and Accrual Basis of Accounting.
✓

Answer

S.n Basis Accrual Basis of Accounting Cash Basis of Accounting
1. Nature of Transactions Both cash and credit transactions are recorded. Cash transactions are recorded.
2. Prepaid/ Outstanding Expenses Accrued Income/ Income Received in Advance Accurued income and income recieved in advance are also accounted and shown in the Balance Sheet Prepaid and outstanding expenses are no adjusted. Similarly, accrued income and income received in advance are not adjusted.
3. Profit or Loss Correct profit or loss is ascertained because it records both cash and credit transactions. Correct profit or loss is not ascertained because it records only cash transactions.

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