Cash accounting is a method where income is recorded only when cash is received and expenses are recorded only when cash is paid. It is simple and easy to understand, but it may not show the full financial picture if receivables, payables, or accrued expenses are significant. Smaller businesses sometimes use it for internal or tax purposes where allowed.
Current Ratio
The current ratio measures a company’s ability to meet its short-term obligations using its short-term assets. It is calculated by dividing current assets by...
Current Liabilities
Current liabilities are obligations that must be paid within one year or within the normal operating cycle. Examples include accounts payable, short-term loans, accrued...
Current Assets
Current assets are assets expected to be converted into cash, sold, or used within one year or within the normal operating cycle of the...
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