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Re: Does Your Business Use Cash or Accrual Method Accounting?

@girlFRIDAY

 

From what I hear, the overwhelming majority of restaurants and service businesses use cash basis because they're dealing with so many small transactions on a daily basis and need to recognize cash flow as it occurs.

 

For a restaurant, anticipating income A/R from a large future purchase probably wouldn't have a significant impact on the bottom line... but I wonder if it would benefit owners to look at expenses on reports from an accrual perspective, such as next month's new kitchen equipment investment. 

 

I've never asked any of the owners I've worked for what they used, but my guess is they were on cash basis.