Team Reflection Paper

Team B

ACC/290

12/18/2012
Martha Muhammad

Team B Reflection Paper

Accrual Basis versus Cash Basis A business can choose between two different accounting methods. Accrual basis and cash basis are two different methods that businesses can use to record the financial transactions. Under accrual basis, a business records revenue, whenever the money is earned instead of waiting to actually receive cash payments. The accrual basis accounting allows businesses to match revenues to the expenses incurred in earning them, providing the company with helpful information for financial reports. Under cash basis accounting, businesses wait to receive the money before recording it as revenue. The cash basis method is simple quick and easy, but if the business makes sales or purchases on credit, the cash basis method does not reflect the results of Operations.
A trial balance is a list of all the balances of ledger accounts which is constructed after the preparation of adjusting entries in a business. An adjusted trial balance includes balances of revenues and expenses along with assets, liabilities, and equities. Adjusted balances can be used directly in the preparation of the statement changes in stockholder’s equity, income statement, and the balance sheet. However, the adjusted final balance sheet does not provide specific information regarding the preparation of the statement of cash flows. Here is an example of an adjusted trial balance for Company A on January 31, 2010("Accounting Explained", 2012).

|Company A |
|Adjusted Trial Balance |
|January 31, 2010