Nonprofit Finance Basics – Cash V Accrual Accounting (3 Key Areas)

In this episode, your host, Aishat discusses the differences between cash accounting and accrual accounting in non-profit financial management. The benefits and drawbacks of each method are explored and she concludes with three things to consider when deciding on which is appropriate for the non-profit

KEY TAKEAWAYS

• Cash accounting records income and expenses based on the exchange of cash,
• accrual accounting records them based on entitlement and incurring of expenses.
• Accrual accounting provides a more holistic financial picture.

BEST MOMENTS

“… One records transactions on exchange of cash and the other records transaction on entitlement and….”

“… the larger and more established non-profits will benefit from the holistic view provided by accrual accounting.”

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