Cash basis versus accrual basis

In MYOB AccountEdge, you can produce Balance Sheet and Profit & Loss reports based on both the accrual basis and cash basis accounting methods.

The cash basis method of accounting records the sale or purchase of goods and services at the time they're paid for, not when they're delivered.

The accrual basis method records the sale or purchase of goods and services at the time they're delivered, regardless of when payment has been made.

If your business expenses rarely carry over to the next accounting period or if you routinely receive payment for your services at the time of the service, cash basis accounting may be the best method for your business. However, accrual basis accounting may offer a clearer picture of your business finances beyond the current accounting period.

Ask your accountant if you're unsure of the accounting method used for your business or to find out which method is best for your company.