Combination Cash Accounting and Accrual Financial Statements

Posted by admin in General on Mar 22nd, 2010 | 0 comments

One practical way to avoid the complexities of accrual basis accounting, and still have meaningful financial statements on an annual or semiannual basis, is to keep the books on a cash basis but make the necessary adjustments on worksheets to record the accruals for statement purposes. These

“adjustments” could be put together on worksheets without the need to formally record the adjustments in the bookkeeping records.

It is even possible that monthly or quarterly financial statements could be prepared on the cash basis, with the accrual-basis adjustments being made only at the end of the year. In this way, it is possible to have the simplicity of cash basis accounting throughout the year, while at the end of the year converting the records through worksheets to accrual basis accounting.

Note

Many times the organization’s independent auditors assist in converting the cash-basis financial information maintained during the year into accrual-basis statements that can be presented in accordance with generally accepted accounting principles.

Taken From : Wiley Not-for-Profit Accounting Field Guide 2003

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