Cash Accounting Essay Example | Topics and Well Written Essays - 500 words

Cash Accounting - Essay ExampleYou also have to satisfy the HP Revenue and Customs by clearing any tubful payment arrears to use the cash accounting scheme. When you start using the cash accounting scheme, it is must to use it for the whole business and it is desirable to continue it for a period of 2 years. However, you can quit the scheme at any moment, provided it does not contribute to your business as well as your accounting establishment does not support the necessary requirements for the scheme. While starting with cash accounting, you need to be very much careful that you do not re-account for any tubful on receipts and payments that are already dealt with.In cash accounting the main accounting record is kept in a cash concord summarizing all the payments made and received. It has a separate column where you can specify the relevant VAT. In the cash book, you also need to record the corresponding impose invoices and provide an efficient system for cross referencing.The b enefit of the cash accounting scheme primarily depends on the time period between the issuing of the gross sales invoice to receiving payments from the customers. Cash accounting is likely to be more beneficial when this time period extends.