The different bases of accounting are cash basis, accrual basis, and tax basis. The cash basis is when a company conducts transaction in cash. These transactions are reflected in the records very quickly. Accrual basis is like credit, this allows services to be completed and revenue to be billed either in advance or after services are completed. When using the accrual basis the transaction do not hit the records as quickly as the cash transactions. The tax basis is a method that small companies use to keep up with taxes. It allows them to keep up on reporting throughout the year. Completing taxes on a quartey basis makes the year end process go much smoother.
I would think that the smaller companies would be able to use a cash basis but for larger companies the accrual basis would be much better. When a company gets into large dollar transactions being able to use PO requests and billing makes more sense. Carrying enough cash to complete the large amount of transactions would be asking for problems in my opinion. Each basis has it's place in companies and I do not believe that one would be overall better than the other.
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