Are you an Ottawa-based business owner looking to understand the complexities of accounting. One important aspect to grasp is the concept of an accounting period, specifically when using the accrual basis method. But what does this mean for your business. Our 2021 guide takes a closer look at the benefits and considerations of using the accrual basis for your accounting period in Ottawa.
The accrual basis recognizes revenue and expenses when they are earned or incurred, regardless of when the cash changes hands. This allows for a more accurate representation of a business's financial health, as it takes into account all transactions within a given period, even if payment is not received until a later date. This method is widely used in larger businesses, as it provides a more comprehensive view of the financial status. Understanding the accrual basis for your accounting period is crucial for making informed financial decisions for your business.
As noted by renowned accounting expert David Cairns, “Accrual accounting provides a more accurate picture of a business's financial health, allowing for better financial planning and management.” By using this method, you can gain a better understanding of your company's profitability and make strategic decisions for long-term success. Stay tuned for our 2021 guide on how to best implement the accrual basis in your Ottawa business.
