Main Differences Between Accrual Accounting and Cash Accounting in GL

Accrual accounting records revenues and expenses when they are earned or incurred, regardless of when cash is exchanged. Cash accounting, on the other hand, records revenues and expenses only when cash is received or paid out.

Accrual accounting provides a more accurate picture of a company's financial health by matching revenues with expenses in the period they occur. Cash accounting is simpler to implement but may not reflect the true financial performance of a business at a given time.

Understanding the differences between accrual and cash accounting is vital in the General Ledger (GL) category to ensure accurate financial reporting and decision-making.