Accounting All-in-One For Dummies (+ Videos and Quizzes Online), 3rd Edition

Chapter 4

Choosing an Accounting Method

IN THIS CHAPTER

Getting clear on the cash and accrual methods of accounting

Walking through other types of accounting

Finding out about FASB’s conceptual framework

You can approach accounting in several ways, depending on the nature of your business and the audience that reads your financial statements. Businesses use accounting to track transactions and keep investors informed, for example, whereas their managers use accounting to make better decisions. Not-for-profit organizations use accounting primarily to help with budgeting and grant proposals. Accountants serving government agencies must also focus on budgeting while providing citizens and government agencies and officials the information they need.

This chapter explains the differences between cash- and accrual-basis accounting, describes the various ways accounting is used, and introduces you to the Financial Accounting Standards Board’s Statements of Financial Accounting Concepts. This chapter also explores many of the specialized fields of accounting which are available as an extension.

Choosing Your Method

You can’t keep books unless you know how you want to go about doing so. ...