Accrual entry and cash entry of the same. How it affects the BS

Question

Accepted Answer

Accrual and cash entries impact the balance sheet differently.

Accrual entry records revenue or expenses that have been earned or incurred but not yet received or paid.
Cash entry records the actual inflow or outflow of cash.
Accrual entry affects the income statement and balance sheet, while cash entry only affects the balance sheet.
Accrual entry increases or decreases both revenue and expenses on the income statement, which in turn affects the net income.
Accrual entry also increases or decreases corresponding assets or liabilities on the balance sheet.
Cash entry increases or decreases the cash account on the balance sheet, but does not impact the income statement.
For example, if a company accrues $1,000 in revenue but has not received the cash yet, the accrual entry increases both revenue and accounts receivable on the balance sheet.
When the cash is received, the cash entry increases the cash account on the balance sheet, but does not impact the revenue or accounts receivable.

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