What is mean by inflation.In which do you think it is growing and why ?
The main difference in accrual based accounting and cash based accounting is in the timing of when revenues and expenses are recognized. In accrual based accounting, revenues and expenses are recorded when they are incurred, and before the cash transaction happens. This method follows the matching cRead more
The main difference in accrual based accounting and cash based accounting is in the timing of when revenues and expenses are recognized.
In accrual based accounting, revenues and expenses are recorded when they are incurred, and before the cash transaction happens. This method follows the matching concept, which ensures that the revenues and their expenses are recorded in the books of accounts in the financial period. Accrual accounting provides an accuracy of a company’s financial position and performance because it involves accounts receivable and accounts payable. For example, if a company delivers goods in December but receives payment in January, the revenue is recorded in December under accrual accounting.
In Cash based accounting, revenues and expenses are recognized only when the cash is actually received or paid. It is simpler and often used by sole proprietorship and individuals because it gives a clear view of cash flow. For example, Under cash accounting, the revenue would be recorded in January when the payment is received, not when the goods were delivered.
Both the methods have their own pros and are chosen to their specific needs and requirements of the business.
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Inflation is nothing but general increase of lives in the products whichever we buy, which leads to decrease in purchase power. We measure inflation with: Consumer Price Index(CPI):average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. ProdRead more
Inflation is nothing but general increase of lives in the products whichever we buy, which leads to decrease in purchase power.
We measure inflation with:
Consumer Price Index(CPI):average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
Producer Price Index (PPI): Measures the average change over time in the selling prices received by domestic producers for their output.
Several Factors affecting Inflation are:
- Demand pull inflation: It occurs when the demand for that product increases i.e., lesser the goods the more it costs.
- Built-In Inflation: When workers demand higher wages and, in response, companies increase the prices of their products to cover higher wage costs.
- Global Factors: International events, such as geopolitical instability or changes in global supply chains, can impact inflation. For example, the COVID-19 pandemic disrupted supply chains worldwide, leading to increased prices for many goods and services.
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