Re: Does Your Business Use Cash or Accrual Method Accounting?
hmmm... not sure what you mean by recognizing cash flow as it occurs.
do you mean the difference between when sales happen vs when the credit card deposits come in? actually, there are ways to deal with that that can recognize cash only when it comes into the bank in terms of cash flow.
as i've said, i've always reported to businesses on accrual basis. And frankly, on the sales side, unless a lot of catering is being done, the difference between cash and accrual is neglible. On the expense side it can be a lot.
I think many restaurants report to the feds on a cash basis because they are S-Corps. If they have the ability to choose cash or accrual, i always recommend accrual. it's so much better to see what's actually happening in those businesses. And if you are really making money or not. IMO