Cash Basis vs. Accrual Basis Accounting Explained: Which Is Right for Your Business?

Confused about cash basis and accrual basis accounting? You're not alone!
In this video, Hannah dives deep into these two fundamental accounting methods. She breaks down their differences in a clear and straightforward way, helping you understand how each method works and the impact they can have on your business's financial reporting.

Whether you're a small business owner trying to keep your books straight or just looking to improve your financial literacy, this video will guide you through choosing the best accounting method for your business needs.

In this video you will find:
0:00 Cash vs Accrual
0:24 - Cash Basis Accounting
1:07 - Examples of Cash Basis Accounting
2:06 - IRS Constructive Receipt Concept
3:32 - Cash Basis Expenses
5:01 - Businesses That Must Use Accrual Accounting
5:51 - Accrual Basis Accounting
6:21 - "Earned" and "Incurred"
7:00 - Example: Accrual Accounting for Service Businesses
8:00 - Revenue Recognition in Accrual Accounting
10:28 - Accrued Expenses
11:00 - Matching Principle in Accrual Accounting
13:22 - Voluntarily Switching to Accrual Accounting
14:25 - Reporting Financials to the IRS
15:22 - Complexities of Accrual Accounting



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Hannah Smolinski is a #CPA and the Founder of Clara CFO Group. Find out more about Clara CFO Group at https://claracfo.com/

Disclaimer: This video is intended for educational purposes and should not be taken as legal or tax advice. You should consult with your financial professionals about your unique financial situation before acting on anything discussed in these videos. Clara CFO Group, LLC is providing educational content to help small business owners become more aware of certain issues and topics, but we cannot give blanket advice to a broad audience.

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