Accrual vs Cash Accounting
The main difference between accrual and cash basis accounting lies in the timing of when revenues are recognized. The cash method is a more immediate recognition of revenue, while the accrual method focuses on anticipated revenue and expenses.
Key takeaways between the two options in Recreation Management:
Accrual accounting means revenues recorded in deferred revenue (activity or rental) are then recognized when they occur, while cash basis accounting means these line items aren't documented until cash exchanges hands.
The cash accounting method is immediate when paid. Accrual recognizes revenue when earned (not necessarily when paid).
Cash basis accounting is easier, and revenue is reported when cash is received.
We recommend consulting with your finance department to determine what efficiencies and benefits are needed moving forward.
Financial Considerations
Review your Chart of Accounts and determine what kind of detail you need.
Does your organization have existing General Ledger accounts or do some need to be created?
What format do you need for your GL account structure?
Note:
Recreation Management does not utilize or accommodate fund accounting at this time.Resources