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    <loc>https://www.shoffaccounting.com/articles/small-business-bookkeeping-and-accounting</loc>
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      <image:title>Articles - Cash Vs Accrual Basis: What’s Best for your Small Business Bookkeeping?</image:title>
      <image:caption>The accrual basis method of accounting is slightly different and more complex than it’s counterpart. This method of accounting lines up revenues and expenses for when they are earned/incurred. Are you unsure what exactly is meant by terms earned or incurred? Maybe the word “deserved” would be a better term for explaining this concept. I like it. For example, someone buys products from your business. You ship them the products and send them an invoice. On the accrual basis your bookkeeping records will go ahead and recognize the sale once the products are shipped (and the invoice is created). It doesn’t matter if it takes the customer 3 months to pay you, the sale would be recognized in the month of shipment. Another example of the expense side of things. Lets say your business orders a piece of equipment. It receives the equipment and an invoice for it. On the accrual basis the bookkeeping records will show the business expense of this purchase in the time period the purchase was made, not the time period the payment of the invoice was completed. Let’s say you wait 6 months or the next year to pay for this item. It won’t change when the expense is placed onto the P&amp;L. There are other, more complex examples that can be discussed when implementing the accrual method of accounting properly, but those examples are for another article.</image:caption>
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