accounting methods and the fiscal year
Choosing the correct method for your organization
As I mention in my last blog, there are two methods: cash basis and accrual.
But which method you should choose?
The main difference if you search about that is the accrual method show true picture about your business situation. You will really now if you are doing the business right. Because of that a lot of accountant suggests that you use the accrual method.
If you have an accountant you may ask him about that.
Because it is better to use the accrual method, my next post will use this method for register the transactions.
Picking the financial year
This is another thing you have to do before continue to deep information about accounting.
You business year must be a 12-month year. But it is not necessary to be like the calendar year that starting from (January and ending by December). You can choose a financial year starting from (June and ending in May). You should choose the best for your business. If you don’t really care it is better to use the calendar year as a financial year or what accountant calls fiscal year.
In next post I will talk about the Accounts and what called the General Ledger. See you then.