What is the difference between cash and accrual ac

[zeenat khan]

Respected all,

can anyone tell me what is the main diffrence between cash and accrual accounting and how can we set it in oracle ebusiness suite.

[anu_uma]

Hi,
when you do the set up's in payables , u have to choose the primary accounting method and optional accounting method

Setup--> Options--> Payable options -->Accounting Tab

Payables create accounting entries based on the accounting method selections

Cash Basis Accounting. You record only payments, and do not record liability information for invoices. The payment distributions typically debit your expense or asset account and credit your cash or cash clearing account. When you post payments, Payables may also create
distribution
Accrual Basis Accounting. You post accounting distributions for invoices and payments. The invoice distributions generally debit your expense account and credit your liability account. For prepayments, Payables creates distributions that debit your prepayment account and credit your liability account.

TIA

[admin]

Thanks Uma for your detailed reply. Just for the info I am writing an document on Accounting in which I will cover basic concepts of accounting and Oracle AP accounting entries. Thanks