Difference between accrual and cash basis.

The recognition of income or expenses by a company can be carried out by two methods - accrual and cash. What are each of them?

What is the accrual basis?

This method assumes the recognition of income or expenses at the time of the actual implementation of the firm's actions to sell a product (for example, shipment from a warehouse) or its production (for example, pay salaries to employees or receive components from a supplier), provided that this recognition will have a legal basis. That is, for example, based on a sales and purchase agreement and other contracts.

Receipt of funds to the account or to the cash desk of the enterprise (in the case of the sale of goods and thus determining income) or their expenditure (in the case of determining the costs associated with the release of products) in the accrual method does not matter. The main thing is that the company has a legal basis for recognizing income and expenses, as well as the fact that the company has taken actual actions, the result of which will necessarily be the emergence of revenue or costs in the future.

Some aspects of the application of the considered methods of recognition of income and expenses are regulated by the Russian Tax Code. As for the accrual method, Article 272 of the Tax Code of the Russian Federation is devoted to it. Let us examine its most notable provisions in more detail.

Article 272 of the Tax Code of the Russian Federation states, in particular, that expenses on the accrual basis within the reporting period are those that are actually committed in it - regardless of the moment of making the necessary payments on them. In addition, as stated in the provisions of Article 272 of the Tax Code of the Russian Federation, the recognition of expenses on an accrual basis can be carried out on the basis of the conditions specified in certain contracts.

In particular, with regard to specifically material costs, their implementation is recorded at the time:

• transfer of raw materials to the factory lines;
• the company signs a document confirming the acceptance or transfer of works or services related to the release of goods.

Thus, the main criterion for the application of the considered method of recognizing income or expenses is their "calculation", the presence of legal grounds and actual events that imply the conduct of financial calculations in the near future by the enterprise or its partners that are associated with the acquisition revenue or, conversely, the emergence of costs.

What is the cash method?

This method assumes the recognition of income and expenses, respectively, based on the moment the funds are received on the account or in the cash desk of the enterprise or write them off against payment of any costs. The very fact of delivery of the goods or the implementation of actions related to production does not matter. However, as in the case of the accrual basis, financial transactions reflecting the receipt and expenditure of funds in the cash desk or in the bank account of the firm must be legally justified.

Some features of the application of the method under consideration are also regulated by the provisions of the Tax Code of the Russian Federation - namely, Article 273 of the Code. Let's study them in more detail.

First of all, it should be noted that, in accordance with the provisions of Article 273 of the Tax Code of the Russian Federation, Russian firms have the right to use the cash method only if their quarterly revenue for 4 quarters does not exceed an average of 1 million rubles. If this condition is met, then income is recognized as received at the time of receipt of funds in the cashier's office or on the account of the enterprise. In turn, expenses are recognized as committed at the time of the actual write-off of a reasonable amount of funds from the cash desk or from the company's bank account.

If a company using the cash method received quarterly revenue, which for 4 quarters on average exceeds 1 million rubles, then from the next quarter it should begin to determine income and expenses using the method accruals - these are the prescriptions of paragraph 4 of Article 273 of the Tax Code of the Russian Federation.

Comparison

The main difference between the accrual method and the cash method is that in the first case, income and expenses are recognized at the time of actual occurrence of grounds for settlements between counterparties (for example, after delivery or, conversely, receipt goods). While in the second case, revenue and costs are recognized upon receipt of funds in the cashier's office or to the bank account of the company or their write-off, even if the company (or its counterparty) has not actually received or delivered the goods.

Of course, financial calculations and the corresponding legal actions of the firm - the supply or purchase of goods, works, services - can be carried out in one reporting period, or even at the same time. In this case, experts recommend that companies recognize income and expenses and reflect them in accounting on an accrual basis, since there are no restrictions for its use in the Tax Code of the Russian Federation.

Having considered the difference between the accrual and cash method, we will reflect the main conclusions in the table.

Table