What is cash system?

The revenues are recognized only at the moment of realization but the expenses are
recognized at the moment of payment. For e.g. sale of goods will be considered under
this method that only at the moment of receipt of cash out of sale of goods. The charges
which were paid only will be taken into consideration but the outstanding, not yet paid
will not be considered. For e.g. Rent paid only will be considered but not the outstanding
of rent charges.

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