December 12, 2013
Accrual Method
Record keeping of financial operations is a must in majority of the non-profit agencies, some other types of organizations utilize what’s termed a cash accounting basis. The non-profit organizations use of the accrual method ensures a more definitive picture of the organizations current standing as far as their finances. L. Martin, author of Financial management for Human Service Administrators states that “With cash accounting these shortfalls or overspendings are less visible until payment is actually made” (Martin, 2001). The use of accrual accounting makes it possible for transactions to be viewed immediately. With accrual accounting transactions are recorded at the moment the services were rendered and paid for. This gives more clarification to accounts payable and receivable. Cash accounting doesn’t give this clarification, until accounts are received.
Cash flow statements are beneficial in that they contribute to conducting and maintaining financial management within the organization. Financial journals can be omitted if the company is utilizing cash flow statements. Proper financial management is the determining factor in an organization succeeding or failing.(Martin, 2001).
Reference:
Martin, L. (2001). Financial management for human service administrators. Needham Heights, MA: Allyn & Bacon.
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new_checkpoint_accrual.docx
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