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Cash vs Accrual

Financial reports are available within the app that allow colleges to measure financial performance on either a cash or accrual basis.

Accrual accounting is considered to be the standard accounting practice for most organisations who earn fees over a period. Equator IT suggests that accrual accounting is the most appropriate way to measure revenue.

Cash accounting tracks the actual money that is coming in and out of your college. For example, if you use cash account and send an invoice for payment to a student or agent, you don’t record that the money has been received until you actually receive it.

By using accrual accounting, you are recording expenses and sales when invoices are first issued. Events are recognized in financials regardless of when cash transactions actually occur. This method of accounting allows you to track the amounts your college owes to people and the amounts owing to you. Accrual accounting matches revenues to expenses when transactions are due and whether or not payments have been made. This method provides a more accurate picture of the college’s current financial position.

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