Accounting Standards

Accounting Standards

Look at the attachment and summarize in a memo style the outcome of both scenarios and show your work.

Answer preview………….

BizCon in its transactions is applying two different accounting standards, and this includes the accrual and the cash basis. The cash basis is important for the small businesses as it is easy to manage the finances of the business. The cash method helps in accounting for the profits of the company, and this involves accounting for the expenses where the money is sent to the suppliers. With the cash basis, there is an analysis of the different small operations that account for the daily activities of the company. The accrual method accounts for revenues of the company services and goods when they are paid (Thomas, 2016). In the case of BizCon, the suppliers’ preference is cash other than credit, and this means it is important that the company records the purchases and the services from the suppliers. The method that the company should use should reflect the true position of the company, and this means there is focus on the payments that the customers make. With the accrual method, it is evident that the company does get paid when it has customers. BizCon uses payments such as cheques and credit, and this creates the need for the recording of the transaction as it happens………..

APA 759 words