Side-by-side numbers that show exactly where the two bases differ.
Accrual records revenue when earned and expenses when incurred; cash basis records them when money moves.
Advances, receivables, prepayments and accruals are where the two bases diverge.
In March a business (1) performed and was paid for $3,400.00 of services, (2) performed $2,700.00 of services on account, (3) received $500.00 for services to be done in April, and (4) collected $1,500.00 for work done in February. Compute March revenue under each basis.
Accrual = $6,100.00; cash = $5,400.00.
Under accrual accounting, a landscaper signs a contract on May 2, mows the lawn on May 10, sends the invoice on May 12, and is paid on June 5. When is the revenue recognized?
Revenue is recognized when the performance obligation is satisfied — the day the lawn is mowed.
Item 1 of 2
In March a business (1) performed and was paid for $1,700.00 of services, (2) performed $1,300.00 of services on account, (3) received $1,500.00 for services to be done in April, and (4) collected $500.00 for work done in February. Compute March revenue under each basis.
Cash vs accrual practice →Lesson →
Original content. Figures are fictional; examples are generated and checked by our accounting engine. Updated 2026-10-29.