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Class 11th Accounts ( Bases Of Accounting in Short ) In Easy Language

**Bases of Accounting (in Easy Language):**


1. **Cash Basis Accounting:** Imagine keeping track of your money only when you actually get it or spend it. So, if you receive money today, you count it today. If you pay a bill today, you count it today. It's simple but might not show the whole financial picture.


2. **Accrual Basis Accounting:** Now, think about counting your money when you earn it or owe it, not just when you touch it. If you did a job today but won't get paid until next month, you still count the money today. This way, you see the full financial story, even if the cash hasn't arrived yet.


In most cases, businesses use accrual accounting because it gives a more accurate view of their finances, even if it's a bit more complicated.

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