The two basis of accounting are
(a) Cash Basis of Accounting: It is a simple form of accounting and a payment is received for the sale of goods or services, a goods purchase and payment is recorded on same date. The payment or receipt recorded date wise and not post poring called cash basis accounting under this system accrual transactions are not considered.
(b) Accrual Basis of Accounting: Accrual basis of accounting matches revenue to the time period in which they are earned and matinees expenses to the time period in which they are incurred. It provides more information about business example: Commissioning on sales payable. Interest on fixed deposit receivable etc are recorded for the current period.
