Is cash receipt included in sales in cash basis accounting?

[straightmarble02]

A question arose in my mind when comparing cash basis accounting and accrual accounting. In accrual accounting there seems cash receipts are not accounted for. And sales (on credit) in cash basis accounting appear as revenues in accrual accounting. If I'm assuming correctly, the amounts of cash receipts are included in the amounts of sales in cash basis accounting, so it can be omitted in accrual accounting. Am I correct in my assumption? I hope a kind and knowledgeable person can give a feedback on this.


CASH VERSUS ACCRUAL ACCOUNTING
"In Illustration 1-1 net operating cash flows are determined for the Carter Company during its first three years of operations."

 

[kirby]

You sell 7 books for $20 each. 4 books are sold for cash. The other 3 the buyer promises to pay you tomorrow.

CASH ACCOUNTING
DR CASH $80
CR BOOK SALES REVENUE $80

ACCRUAL ACCOUNTING
DR CASH $80
CR BOOK SALES REVENUE $80
DR ACCOUNTS RECEIVABLE $60
CR BOOK SALES REVENUE $60


DAY TWO - YOU ARE PAID FOR THE OTHER THREE BOOKS

CASH ACCOUNTING
DR CASH $60
CR BOOK SALES REVENUE $60

ACCRUAL ACCOUNTING
DR CASH $60
CR ACCOUNTS RECEIVABLE $60


So - in accrual accounting cash receipts ARE accounted for. In pure cash basis accounting, sales on credit do not appear - which is why most folks would use a MODIFIED cash basis acctg method to pick up those credit sales.

Hope this helps

 

[straightmarble02]

Thank you very much, kirby.